STOCKS : Takeover Talk Spurs Market’s 5.98 Rise

NEW YORK —  The stock market rose Monday, but its advance failed to pack the punch of Friday’s impressive rally.

The Dow Jones index of 30 industrials advanced 5.98 points to 2,753.63, its ninth-highest close ever.

Advancing issues edged out declining ones by about 8 to 7 in nationwide trading of stocks listed on the New York Stock Exchange, with 810 issues up, 708 down and 469 unchanged.

Big Board volume totaled 150.36 million shares, down from 199.20 million in Friday’s session.

Analysts said the market was buoyed mainly by takeover speculation involving several stocks and strength in technology issues. Investors’ hopes for lower interest rates, which had catapulted Wall Street higher last Friday and lifted the Dow Jones index 41.38 points, appeared less solid Monday.

“A lot of focus is on the Federal Reserve,” said Hugh Johnson, senior vice president of First Albany Corp. in Albany, N.Y.

The market will have to see Friday’s scheduled government report on unemployment in November before regaining confidence that the Fed will ease credit by nudging interest rates lower, he said.

Wall Street also seemed a bit disappointed with the results of the U.S.-Soviet summit this past weekend, analysts said. Hopes for the summit had helped spark Friday’s rally.

The market shrugged off Monday’s report by the Commerce Department that orders to U.S. factories for manufactured goods fell 0.2% in October to their lowest level since July.

Mattel climbed 1 5/8 to 18 7/8 in heavy trading. The company said it believed that sales in the fourth quarter, including the important Christmas selling season, would rise 25% from last year on strong demand for its toys.

In Tokyo, share prices erased Friday’s losses, jumping to a record close in brisk trading, on enthusiasm for better East-West relations and individual stocks. The Nikkei 225-share average surged 171.19 points to close at 37,303.87.

Shares also finished lower on London’s Stock Exchange, although bargain-hunting helped lift them from their lows of the session. By the close, the Financial Times 100-share index was down 7.7 points at 2,303.4.

CREDIT

Bond Prices Mixed as Gold Declines U.S. Treasury bond prices were narrowly mixed in quiet trading.

The government’s closely watched 30-year bond gained 1/32 point. Its yield was unchanged from Friday at 7.87%.

Analysts said there was little information moving the market, which has been in an environment of uncertainty over whether the Federal Reserve Board will lower interest rates because of a slowing economy.

Analysts said the market received an afternoon boost when prices for gold and other commodities dropped, easing worries over inflation and raising hopes the Fed would push rates lower.

The federal funds rate, the interest charged on short-term loans between banks, was quoted at 8.50%, up from 8.438% late Friday.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds closed at 93.875, up 1/16 point. The average yield to maturity fell to 7.22% from 7.23% late Friday.

CURRENCY

Light Day for Dollar, Focus on the Mark The dollar finished mixed against major foreign currencies as traders renewed their interest in the West German mark.

Marc Chandler of Money Market Services International in Chicago said currency dealers directed attention mainly to the West German mark and bought on speculation that the country will have to raise interest rates to stem a possible surge in economic growth.

The Swiss franc was weighed down by heavy selling pressure related to Switzerland’s lower interest rates, compared to its European neighbors, particularly West Germany, Chandler said.

Trading in dollars is expected to be light this week ahead of Friday’s potentially market-moving report on U.S. unemployment.

In Tokyo, the dollar rose to a closing 143.48 Japanese yen from 143.08 yen at Friday’s close. Later, in London, it rose further to 143.57 yen and, in New York, the dollar rose to 143.65 from 143.40 late Friday.

In London, the British pound fell to $1.56 from $1.57 late Friday. In New York, the pound fell to $1.56 from $1.57 late Friday.

COMMODITIES

Large Gold Supplies Cause Prices to Fall Gold prices were off sharply on New York’s Commodity Exchange as investors reacted to a recent run-up in prices and large supplies.

On other markets, cotton was off sharply, grain and soybean futures were lower, cattle futures were mostly higher and pork futures dropped, and energy futures were mostly higher.

Gold settled $12.50 to $13.50 lower, with the contract for delivery in December at $401.10 an ounce; silver was 15.4 to 16.6 cents lower, with December at $5.509 an ounce.

Cotton prices plunged the limit in the March, May and July contracts on the New York Cotton Exchange amid technical and computer fund selling.

The price of the March cotton contract dropped to 68.94 cents a pound from the 78.40 cents a pound it was trading at Nov. 2.

Analyst Ernest Simon of Prudential-Bache Securities Inc., said the price decline began with the release of last month’s U.S. Department of Agriculture’s crop production estimate, which forecast a larger than expected cotton crop.

Simon noted that the selloff was largely technical in nature in the beginning, paced by computer-generated and speculative selling. However, he said that has changed.

“There now is concern about the general economic situation,” he said. “If there is a slowdown in the economy, textiles are especially sensitive to the situation.”

Cotton was 1.70 to 2.25 cents lower, with December at 66.35 cents a pound.

Grain and soybean futures fell on the Chicago Board of Trade.

Continued concern over the lack of export sales weighed on the market, said analyst William Biedermann of Allendale Inc. in Chicago.

Indications from South America that soybean crops will have adequate soil moisture to get off to a good growing start was a major drag on prices, Biedermann said. Previously dry areas in Argentina received rain during the weekend.

Forecasts of rain this week in the dry winter wheat crop region caused a selloff by professionals holding long positions in wheat.

Corn futures traded in a narrow range as speculators liquidated to take profits as overall weakness in the market influenced corn prices, Biedermann said.

Wheat was 4.25 to 7 cents lower, with December at $4.04 a bushel; corn was 2 cents lower to 1.25 cents higher, with December at $2.325 a bushel; oats were a 0.25 to 1 cent lower, with December at $1.43 a bushel; soybeans were 1 cent to 4.75 cents lower, with January at $5.7225 a bushel.

Energy futures were mostly higher on the New York Mercantile Exchange, with heating oil prices giving support to the market.

West Texas Intermediate crude oil was 7 cents lower to 5 cents higher, with January at $20.25 a barrel; heating oil was 0.09 to 0.88 cent higher, with January at 63.79 cents a gallon; unleaded gasoline was 0.18 to 0.41 cent higher, with January at 52.52 cents a gallon.