Stocks Struggle to Small Gain; Dow Up 4.17

The stock market struggled to a small gain Thursday, following through on Wednesday’s advance after some early hesitation.

The Dow Jones index of 30 industrials, up 16.32 on Wednesday, gained another 4.17 to 2,661.61. That pushed the index past its previous post-crash closing high of 2,660.66, reached Monday.

Advancing issues outnumbered declines by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 874 up, 628 down and 499 unchanged.

Although the Dow Jones industrial index remains more than 60 points below its 1987 high, the NASDAQ composite index for the over-the-counter market became the latest of several broader market measures to hit a record level.

It rose 2.85 to 456.93, surpassing its reading of 455.26 on Aug. 26, 1987.

The Commerce Department reported Thursday that the index of leading economic indicators dipped 0.1% in June, following a downward-revised drop of 1.3% the month before.

Analysts had been forecasting a decline of 0.2% to 0.3% for June. They said the actual figure had little apparent impact on the market.

Volume on the floor of the Big Board came to 168.69 million shares, down from 181.76 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 210.44 million shares.

Walt Disney jumped 6 3/8 to 121 in active trading. The company said this week it will double the capacity of its new theme park in Orlando, Fla. The stock has also been buoyed by takeover speculation.

Elsewhere among the blue chips, International Business Machines rose 1 to 113 3/4, American Express gained 1/2 to 38 1/4, General Motors was up 1 3/8 to 46 and Philip Morris climbed 1 1/8 to 163 5/8.

In Tokyo, the 225-issue Nikkei stock average lost 119.53 points, or 0.34%, finishing at 34,779.81.

Share prices ended slightly lower in London as the market struggled to find direction. The Financial Times-Stock Exchange 100-share index ended down 1.5 points, or 0.06%, at 2,306.3, below a session high of 2,310.3.

Credit

Long-term bond prices sank, driving yields higher, even though the government’s report on leading indicators added to signs that the economy might be slipping into a mild recession.

A recession would be good for the bond market because it would help squelch inflation, which erodes the value of interest-paying securities.

Bond prices fluttered slightly higher after the figures were released but sank later and ended with a substantial loss.

The U.S. Treasury’s benchmark 30-year bond fell 21/32 point, or about $6.56 per $1,000 in face value. Its yield, which moves in the opposite direction from price, rose to 7.90% from 7.84% late Wednesday.

Shorter-term bonds had smaller declines. The 30-year bond was the biggest loser, evidently because of a threat by President Bush to veto a savings and loan bailout in favor of his own plan.

Also hurting bond prices was general nervousness that the market’s recent rally was overextended. Some traders saw unwelcome signs of economic health in figures this week on auto sales, chain store sales and new home sales.

In the secondary market for Treasury bonds, prices of short-term governments were down between 3/32 point and 3/16 point, intermediate maturities fell 1/8 point to 7/32 point and long-term issues were 5/8 point to 11/16 point lower, said Telerate Inc., a financial-information service.

Yields on three-month Treasury bills fell to 7.88% as the discount fell 2 basis points to 7.63%. Yields on six-month bills rose to 7.82% as the discount rose 2 basis points to 7.43%. Yields on one-year bills rose to 7.68% as the discount rose 1 basis point to 7.17%.

The federal funds rate, the interest on overnight loans between banks, traded at 8.875%, unchanged from late Wednesday.

Currency

The dollar extended its advance against most major currencies, bolstered by continued edginess about the hostage situation in the Middle East.

Gold prices rose in Europe and the United States after falling in Asia.

On the Commodity Exchange in New York, gold for August delivery closed at $373.70 an ounce, up from Wednesday’s settlement of $370.10. Republic National Bank of New York quoted gold at $372.25 an ounce as of 4 p.m. EDT in New York, up from Wednesday’s $369.70.

Traders said nervousness stemming from the hostage situation continued to lift the dollar, usually considered a “safe haven” currency during episodes of international tension.

In addition, some market watchers speculated that traders were talking the dollar up ahead of today’s release of U.S. unemployment figures for July. If the figures prove disappointing, traders will be cushioned from a sharp fall in the dollar by its already higher levels.

In Tokyo, where trading ends before Europe’s business day begins, the dollar edged up 0.20 Japanese yen to close at 136.40 yen. Later in London, the dollar traded at 136.40 yen. By the end of trading in New York, the dollar was quoted at 137.20 yen, up from 136.60 yen late Wednesday.

The British pound traded in London at $1.6475, down sharply from $1.6635 late Wednesday, even though the Bank of England entered the market to support the sagging currency. Later, in New York, sterling stood at $1.6370, cheaper for buyers than $1.6560 late Wednesday.

In Zurich, Switzerland, gold was little changed in moribund trading after a two-day national holiday. The closing price was $369, up from Monday’s close of $368.25.

Earlier in Hong Kong, gold fell 40 cents to close at $370.05.

Commodities

Soybean futures plunged to a 20-month low on selling linked to good growing weather, poor demand and apparent liquidation of a large holding by Italian grain merchant Ferruzzi Finanziaria S.p.A.

On other markets, precious metals rallied strongly, energy futures were lower, cattle were mostly higher and pork futures were mixed.

At the Chicago Board of Trade, soybeans for delivery in August settled 26 cents lower at $5.8225 a bushel, the lowest settlement for a near-month soybean contract since Nov. 19, 1987.

Wheat settled 1.75 to 6 cents lower, with September at $3.87 a bushel; corn was 4.25 cents lower to 1.50 cents higher, with September at $2.1725 a bushel, and oats were 2.50 to 3 cents higher, with September at $1.3575 a bushel.

Forecasts for a continuation of near-perfect growing conditions in the Midwest provided a bearish atmosphere for the soybean market. But traders and analysts said the steep decline probably was triggered by signs of weak demand and selling by Ferruzzi, a leading European grain dealer that has had a large holding in soybean futures.

The slack market for soybeans and soybean meal also reflected a reluctance among users to make large purchases ahead of the September harvest period, when new supplies typically drive prices down.

Gold and silver futures posted strong gains on New York’s Commodity Exchange.

Gold settled $3.50 to $3.70 higher, with August at $373.70 an ounce; silver was 7 to 7.2 cents higher, with August at $5.296 an ounce.

West Texas Intermediate crude oil settled 7 to 12 cents lower, with September at $18.21 a barrel; heating oil was 0.38 to 0.48 cent lower, with September at 49.12 cents a gallon, and unleaded gasoline was 0.16 to 0.32 cent lower, with September at 50.66 cents a gallon.

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