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FINANCIAL MARKETS : Dow Bounces Back a Bit; Yields Climb

August 04, 1995|From Times Staff and Wire Reports

Blue-chip stocks clawed back from a drop of more than 40 points Thursday to close with an 11-point gain, boosted by selective bargain hunting.

Treasury bond yields bolted higher after a government unemployment report signaled that the economy is reviving following just one interest rate cut by the Federal Reserve Board.

The benchmark 30-year bond's price fell 30/32, or $9.375 on a $1,000 bond, raising the yield to 6.93% from Wednesday's 6.86%.

"People are realizing you can't have your cake and eat it too: If you have a re-acceleration in the economic activity, the chance of lower interest rates is unlikely," said Dennis Lynch, chairman at Lynch & Mayer. That means that "corporate profits won't be as good next year."

The dollar slipped Thursday as traders sold the currency to take profits after its rise to its highest level against the Japanese yen in nearly five months.

In late New York trading, the dollar was quoted at 90.50 yen, down from 90.95 on Wednesday. At one point early Thursday in Tokyo, the dollar reached 91.25 yen, its highest level since early March.

A rising dollar might jeopardize U.S. exports, particularly in the important technology sector. Technology issues were hit by a big selloff early in the session but partially recovered later.

The Dow Jones industrial average ended 11.27 points higher at 4,701.42, up from four straight days of losses totaling 42 points. But in the broader market, declining issues led advancers 1,222 to 942 on active volume of 353 million shares on the New York Stock Exchange.

Walt Disney's 1 1/4-point decline to 59 3/8 weighed on the 30-issue Dow average.

The market tumbled early in the session after the Labor Department said first-time jobless claims dropped by 51,000 in the week ending July 29, the largest weekly decline in more than a year.

Phil Orlando, a senior vice president at First Capital Advisers, said the stock market's performance was impressive in the face of the jump in long-term bond interest rates.

The Nasdaq composite index fell for a fifth straight day, ending with a loss of 1.05 points at 982.70, despite some bargain-hunting in the technology group. MCI Communications, Oracle and Cisco Systems dragged the index lower.

The Nasdaq stock market suspended its small order execution system from 9:30 a.m. to 10:25 a.m. Eastern time because of a telecommunications network failure, a Nasdaq spokesman said.

The network connects Nasdaq market makers' workstations to mainframe computers at Nasdaq's main computer centers. The small order system has been suspended eight times this year.

Among market highlights:

* The stock of health maintenance organizations fell after Humana and United Healthcare posted quarterly earnings that fell below Wall Street's estimates. United Healthcare tumbled 2 5/8 to 42 3/8, Humana shed 1 3/8 to 18 5/8 and U.S. Healthcare lost 1/2 to 31 1/8.

* Airline stocks were mostly higher on a Gruntal & Co., report upgrading the status of several carriers from "speculative outperform," to "outperform." Delta Air Lines rose 1 3/8 a share to 75 3/4 and UAL Corp. ended 1/8 higher at 144 1/4.

Overseas stock markets closed mixed, with the Nikkei index in Tokyo rising 1.03%. But the FT-SE 100 index in London and Frankfurt's DAX index ended slightly lower.

Oil prices fell Thursday as Hurricane Erin moved inland, causing little damage to oil facilities along the Gulf of Mexico.

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