Dow Up 25.26 on Good News From Detroit : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* Stocks posted broad gains as more good news from Detroit car makers restored confidence in the market. The Dow Jones industrial average ended 25.26 points higher at 3,333.18.

* In the credit markets, bond yields rose in a volatile session keyed to a Treasury debt-sale announcement that contained mixed signals for traders.

Stocks

Stocks opened in positive territory, continuing the advance that started to take shape in the final hour of the previous session. The market gained steadily and closed at the day’s highs.

In the broader market, advancing issues outnumbered declining ones by about 5 to 3 on the New York Stock Exchange, where volume came to 206.78 million shares, up from 189.22 million Tuesday.

The best news came from the badly battered over-the-counter market, where a major rally in high-tech stocks pulled the NASDAQ composite index up 9.61 points, or 1.7%, to 569.94.

Among the blue chips, Ford Motor reported a $338-million profit for the first quarter, a sharp turnaround from its $884-million loss a year ago. That drew a herd of new buyers to Ford shares, which have been leading the market this year. Ford gained 1 3/4 to 45 5/8. The stock started the year at 28 1/8.

Also, General Motors soared 2 to 42 3/8 on the heels of its first-quarter profit report, which also was better than expected.

“When you see that the economy grew at 2% last quarter and confidence is beginning to build, that is what prompts prices up,” said Cummins Catherwood, managing director at Rutherford Brown & Catherwood.

“CEOs, directors--people who are closer to the fire than I am--are saying they feel pretty good about things. Despite my personal misgivings, that makes me feel pretty good too,” he said.

Even so, some analysts said Wednesday’s rally was in part a technical “snap-back,” after heavy losses in many stocks recently.

“The move today is related more to reflex rallies than educated buying,” said Joseph Barthel, director of investment strategy at Fahnestock & Co. “My feeling is that this rally should not pick up a lot of steam from current levels.”

Among the market highlights:

* The tech-stock rally was spurred by a feeling that some of the stocks have been unfairly slammed recently, analysts said. Many high-tech companies have reported improving sales and earnings trends so far this year, yet their stocks have been pummeled.

In the rally, Apple Computer surged 2 3/4 to 57, Hewlett-Packard soared 4 5/8 to 80, Novell rose 2 3/4 to 52 1/2, Microsoft gained 2 3/8 to 111 3/8, Autodesk jumped 3 1/2 to 32 1/2, and Quarterdeck added 2 3/4 to 16.

* Biotech stocks also snapped back from their recent horrendous losses. Amgen jumped 4 to 54, Gensia gained 2 to 30, Alza rose 1 3/4 to 41 7/8, and Immune Response added 2 to 17 3/4.

* Besides auto makers, some other industrial issues continued to be pumped up by economic-recovery expectations. Du Pont rose 1 5/8 to 52 5/8 after the nation’s biggest chemical firm announced a 5% rise in its dividend.

Other industrial winners included Kodak, up 1 1/2 to 40; Great Lakes Chemical, up 2 3/4 to 62 7/8; and rail giants Conrail, up 1 7/8 to 90 1/2, and Union Pacific, up 1 3/8 to 53 3/8.

* Major bank and brokerage stocks showed strength. J.P. Morgan surged 1 3/4 to 55 5/8, BankAmerican gained 1 3/8 to 46 3/4, and Merrill Lynch was up 1 1/8 to 48 5/8.

* L.A. Gear rose 1 1/4 to 12. The athletic shoe firm on Tuesday said it sold a 4% stake in itself to Britain’s Pentland Group.

* TelMex, the Mexican phone monopoly, slipped 1/8 to 56 3/4. After the market close it said first-quarter earnings rose 13% on a 17% revenue gain.

Overseas, London, shares closed at a 1992 high, fueled by talk of takeovers, strength on Wall Street and a buoyant futures market. The Financial Times 100-share average ended up 13.9 points at 2,664.9.

Share price levels ended virtually unchanged in Frankfurt with the 30-share DAX average closing just 0.03 of a point down at 1,735.91.

The Tokyo market was closed for a national holiday.

Credit

The price of the Treasury’s 30-year bond closed down 7/32 point, or $2.19 per $1,000. Its yield rose to 8.06% from 8.05% late Tuesday. Shorter-term bond yields rose by greater amounts.

Trading focused entirely on the Treasury’s announcement that it would auction $36 billion in securities next week in its regular quarterly refunding. That’s the same amount as the previous refunding in February and lower than anticipated, which initially lifted prices.

The market had been concerned that a large amount of securities at the auction would be difficult to absorb and depress bond prices. But the suspension of the savings and loan bailout program, which has been without spending authority since March, held down borrowing needs for the auction.

Even so, demand for bonds evaporated as the trading day wore on, as many short-term traders were disappointed that more long-term investors didn’t react favorably to the Treasury announcement.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3%, down from 3.50% late Tuesday.

Currency

The dollar closed slightly higher in slow New York trading after a mixed showing abroad that reflected a dearth of news, a holiday in Japan and the coming three-day May Day weekend in Europe.

“There was just a lack of any movement, very quiet,” said Charles Cossentino, a vice president at the New York branch of Deutsche Genossenschaftsbank.

The dollar closed in New York at 1.658 German marks and 133.50 Japanese yen, compared to Tuesday’s 1.657 marks and 133.20 yen.

Commodities

Orange juice futures prices fell sharply, steepening the market’s collapse to 6 1/2-month lows as fears of a summertime shortage faded.

On other commodity markets, grain and soybean futures retreated; oil futures rose; livestock and meat futures were mostly lower, and precious metals were mixed.

Frozen concentrated orange juice for May delivery on the New York Cotton Exchange fell 0.60 cent to $1.324 a pound, the lowest price for near-term deliveries since Oct. 10. The more actively traded July contract sagged 2.25 cents to $1.2495 a pound.

The drop extended the steeper losses posted Tuesday after an Agriculture Department attache in Brazil raised U.S. estimates for 1991-92 Brazilian frozen orange juice production and exports by 10%.

Brazil partially supplies the U.S. juice market. The higher estimate of Brazilian exports for the crop-year ending June 30 erased fears of a U.S. supply pinch before juice from Brazil’s 1992-93 crop begins arriving and the U.S. harvest begins this fall.

Elsewhere, light, sweet crude oil for June delivery rose 36 cents to $20.77 a barrel on the New York Mercantile Exchange despite an American Petroleum Institute report late Tuesday that showed increases last week in U.S. supplies of crude oil, gasoline and petroleum distillates, which include heating oil.

Gold futures fell slightly, and silver advanced in quiet trading on New York’s Commodity Exchange. May gold fell 80 cents to $336.10 an ounce, while May silver rose 1.5 cents to $3.955 an ounce.

Market Roundup, D8