Dow Gains 14; Bonds Yields Still on Rise : Market Overview

On the fifth anniversary of the 1987 market crash, Wall Street ignored the ghosts and ended higher, paced by a major rally in smaller stocks. The Dow Jones industrials rose 14.04 points to 3,188.45.

* Treasury bond yields continued to rise on investor worries that a Bill Clinton presidency would boost the federal budget deficit. The 30-year T-bond yield jumped to 7.57% from 7.52% Friday.

Stocks

Investors focused on earnings and on politics ahead of the third and final presidential debate Monday night.

Significantly, traders noted that stocks seemed to be parting ways with the bond market. Though bond investors assume a Clinton win could mean higher interest rates, some stock traders are focusing on the potential for higher corporate earnings if Clinton can restart the economy.

Technology stocks--which would be winners in a stronger economy--led the rally in NASDAQ issues, along with biotech stocks. The NASDAQ composite index soared 8.06 points or 1.4% to 590.67.

Overall, the broad mark outperformed the Dow. Advancing issues outnumbering declines 3 to 2 on the New York Stock Exchange on volume of 222.15 million shares, against 235.92 million Friday.

Among the market highlights:

* Tech issues that surged included Intel, up 2 5/8 to 65 7/8; Microsoft, up 2 1/2 to 87 7/8; Texas Instruments, up 3 1/8 to 48 1/8; AST Research, up 1 3/8 to 17 7/8, and Adobe Systems, up 2 3/4 to 31 3/8.

But IBM continued its downward spiral, losing 2 1/4 to 68 1/2.

* Biotech stocks also rose sharply, on hopes that a new law will speed federal approval of new drugs. Amgen gained 2 1/8 to 64 1/8, Immunex leaped 3 3/8 to 48 3/4, Gensia Pharmaceuticals rose 2 to 21, and Alza added 1 3/8 to 39 3/4.

* Some engineering stocks gained, which analysts attributed to expectations that a Clinton presidency would boost infrastructure spending. Fluor leaped 2 3/8 to 46 3/8, Jacobs Engineering added 1/2 to 39, and Granite Construction jumped 2 1/2 to 22 1/2.

* Insurance stocks continued to soar. Progressive jumped 8 7/8 to 75 5/8. On Friday, the Ohio-based company reported third-quarter earnings of $2.09 a share, up from 41 cents a year ago. Other insurance winners included AIG, up 1 7/8 to 110 1/8; General Re, up 2 5/8 to 109 1/4, and Chubb, up 2 to 85 3/8.

*McDonnell Douglas soared 4 1/8 to 46 1/2. It may have been boosted by short sellers covering their positions. But Lockheed slipped 1 to 46 1/4. The company said it isn’t certain it can meet analysts’ 1993 earnings expectations of about $6 a share.

Overseas, Tokyo shares fell sharply on renewed concern about the economy. The Nikkei average slumped 466 points or 2.7% to 16,903.81--the first close below 17,000 since Aug. 26.

In Frankfurt, the DAX average rose to its highest level in two weeks, gaining 17.46 points to 1,479.07. London’s Financial Times 100 index lost 1.7 points to 2,562.2.

Credit

Interest rates continued to rise across the board on election-related fears. Investors are sure that a Democratic victory in the presidential election will mean higher federal spending and thus higher interest rates.

“The bond market will maintain its right to worry,” said Mitchell Held, chief financial economist at Smith Barney, Harris Upham & Co.

The worst-hit Treasury bonds were in the seven-year maturity area, but rates also advanced even on very short-term securities. The yield on one-year Treasury notes, for example, jumped to 3.41% from 3.31% Friday.

The fed funds rate, the rate on overnight loans between banks, rose to 3.063% from 2.875% Friday.

Currency

The dollar traded in a tight range before drifting higher late in the session. Most of its gains were attributed to problems with other currencies rather than any fundamental strength of its own.

The dollar closed at 120.45 Japanese yen in New York, up from 119.50 Friday. It also rose to 1.499 German marks from 1.480.

The British pound fell sharply amid worries over British economic problems and perceptions of lack of government leadership. The pound slumped to $1.623 from Friday’s $1.650.

Commodities

Metal futures traded in a narrow range as the economy continued to exert pressure on prices.

Gold futures for October delivery settled 30 cents higher at $342.70 an ounce on New York’s Commodity Exchange. October silver was 1.2 cents higher at $3.72 an ounce.

Meanwhile, November light, sweet crude oil was 14 cents lower at $22.14 a barrel on the New York Mercantile Exchange.

Market Roundup, D8