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FINANCIAL MARKETS : Bargain Hunts Revive Stocks; Yields Drop : Market Overview

September 23, 1993|From Times Staff and Wire Reports

A drop in long-term interest rates and strength in secondary shares put a halt to a four-session string of stock market losses that had wiped nearly 100 points off the blue-chip index.

* The Treasury's 30-year bond yield fell, for the first time in seven sessions, on better than expected demand for new five-year notes.

* Gold prices skidded and lost most of the gain sparked by the political crisis in Russia.

Stocks

Analysts said investors returned to pick up bargains. Fears of a power struggle in Russia had sent them fleeing for the exits Tuesday.

The Dow Jones industrial average rose 9.78 points to 3,547.02; the Nasdaq index of smaller companies' stocks soared 1.63%, or 11.98, to 745.54.

Advancing issues outnumbered declining ones about 2 to 1 on the New York Stock Exchange.

Volume on the floor of the Big Board came to 298.96 million shares, slightly fewer than the 300.31 million shares traded Tuesday.

While the broader indexes remained solidly higher for most of the day, blue-chip stocks skipped around before they moved higher.

Russian President Boris N. Yeltsin on Wednesday appeared to have military backing for his move to dissolve the parliament, and there were few unsettling developments overnight to bring stocks down for a second day.

Higher bond prices also encouraged stock investors. Stocks and bonds have often moved in tandem recently because the lower interest rates that come with higher bond prices make stocks a more attractive investment.

Among the market highlights:

* Primerica rose 1 3/8 to 47 3/8 and Travelers gained 3/4 to 36 3/4 after they agreed to a merger traders said was worth $5 billion.

* Paramount Communications was again active, rising 7/8 to 77 7/8. QVC Networks on Monday offered $9.5 billion in cash and stock for Paramount, rivaling an earlier bid from Viacom. QVC gained 3 7/8 to 60 and Viacom rose 2 1/8 to 58 7/8.

* On the Nasdaq, technology stocks soared. Lotus Development rose 3 to 42.

* Microsoft rose 1 1/4 to 77 1/4; Compaq gained 2 3/8 to 58; Texas Instruments was up 3 1/8 to 77 3/4.

Other Markets

The spotlight shifted to the Treasury auction from Russian politics.

The yield on the 30-year bond fell to 6.09% from Tuesday's rate of 6.12%, pushing its price, which moves in the opposite direction, up 15/32 point, or $4.69 per $1,000 in face value.

As the Russian situation eased, investors were freed to concentrate on the positive results of the government's auction of $11 billion in five-year notes.

Demonstrating brisk demand, the government sold the notes at a yield of 4.83%--less than expectations of up to 4.87%, analysts said. That meant the Treasury did not have pay as high an interest rate to lure investors.

The federal funds rate, the interest on overnight loans between banks, was 3.125%, up from from 3% late Tuesday.

On the New York Commodity Exchange, gold bullion for current delivery plunged $9.00 and settled at $353.90 an ounce, nearly erasing Tuesday's gain of $9.40 an ounce.

"It seems that the revolution has turned into a parade," said John Geraghty, a futures market trader at B & C Trading Inc.

Silver prices also were eroded. Silver closed at $4.040 an ounce, down from $4.186 an ounce on Tuesday.

Meanwhile, November deliveries of light, sweet crude oil fell 39 cents on the New York Mercantile Exchange, to $17.59 a barrel

In currency trading, the dollar fell, erasing gains from the previous session as the concerns about political instability in Russia dissipated.

In New York, the dollar settled at 106.18 Japanese yen and 1.630 German marks, down from 106.25 yen and 1.637 marks on Tuesday.

Market Roundup, D8

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