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Stocks, Bonds Stop Sliding; Dollar Is Mixed

March 12, 1994

Market Overview

* Renewed buying in the bond market arrested a slide in stocks and bonds. Bond yields did not break through the 7% barrier.

* The dollar was mixed against major currencies, while gold prices gave up some of the gains registered in market nervousness Thursday.

Stocks and Bonds

The Dow Jones industrial average spurted 32.08 to 3,862.70, which gave the blue chip gauge a gain of 30.40 points for the week.

Broader measures also benefited from the buying that accelerated late in the day. The New York Stock Exchange composite index added 1.31 to close at 258.53 and ended the week up 0.83. Standard & Poor's 500 index climbed 2.54 to 466.44 and added 1.70 in the week.

Advancing issues outpaced declines by more than a 7-6 margin on the NYSE. Volume amounted to 303.23 million shares as of 4 p.m., down from 333.46 million in the previous session.

"The market closed on a firm note, which it hasn't done for some time," said Eugene Peroni, a technical analyst at Janney Montgomery Scott Inc. in Philadelphia.

Peroni attributed the turnaround in stocks to renewed buying in the bond market. The 30-year Treasury issue rose about 7/8 point--recouping about half of Thursday's loss and lowering its yield to 6.90% from about 6.97% on Thursday.

Bond traders bought for technical reasons after concluding that Thursday's frenzied selling was overdone.

The financial markets seemed to regain confidence gradually as the session progressed. The morning was spent in cautious trading, with the markets struggling to overcome the gloomy aftereffects of Thursday's rumor-incited rout. Rumors related to the Whitewater land development affair raised concerns about the Clinton Administration's ability to concentrate on policy matters.

A government reading on retail sales had no lasting impact on the markets. The Commerce Department said that despite the bad winter weather in much of the nation, retail sales rose 1.5% in February after falling in January for the first time in 10 months.

February's gain was larger than expected, but January's figure was revised downward, indicating that the severe weather and Northridge earthquake depressed sales more than previously estimated.

Grumman gained 3 to 64 3/4 in heavy NYSE trading. After the close of regular trading Thursday, Northrop bid $60 a share, or $2.04 billion, for Grumman, challenging the Martin Marietta agreement to buy the defense company for $55 a share, or $1.93 billion. Northrop rose 1/8 to 41 3/8 and Martin slid 2 to 44 1/2.

Conspicuous among the losers was Redlands-based Pacific Physicians Services, which tumbled 9 7/8 to 17 1/2 in heavy Nasdaq trading. The stock's investment rating reportedly was downgraded after the company's quarterly earnings failed to impress Wall Street analysts.

Many financial stocks, including banks and brokerages, rose in sympathy with the bond market. Banks in particular had been weighed down recently by rising interest rates. Citicorp rose 1 1/8 to 39 3/8, Chemical Bank rose 1/2 to 36 3/8 and Merrill Lynch jumped 2 3/8 to 43 1/4.

Shares of Los Angeles-based Aames Financial fell 20% in heavy trading on the company's projection that third-quarter earnings will slide to 17 to 19 cents a share from 28 cents a year earlier. Aames closed at 7 1/2, down 1 7/8.

World markets generally closed lower Friday in the wake of Wall Street's weakness Thursday.

In London, stocks fell for the fourth straight session as a wider-than-expected Britain trade gap weakened the pound and drove down government bonds. The FT-SE 100 Index of leading shares slumped 42.0, or 1.3%, to 3191.9.

In Tokyo, stocks posted small gains after Japanese companies sold stocks to raise cash for year-end accounting purposes, traders said. The benchmark Nikkei-225 average closed up 24.60 points, or 0.12%, at 20,115.31 for a second straight day of advances.

Market Roundup, D4

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