STOCKS : Dow Declines 2.46, but Broader Market Gains

A late flurry of selling smothered a rally in blue chip stocks Wednesday but failed to dampen sentiment on the broader market, where moderate gains were scored.

The Dow Jones industrial average, up more than 30 points at its midday peak, finished with a 2.46-point loss at 2,944.77.

New York Stock Exchange volume totaled 178.20 million shares as of 4 p.m. EDT, against 151.43 million at the same point Tuesday.

Despite the Dow’s loss, advancing issues beat losers 837 to 699 on the NYSE. Secondary market indexes also showed gains. The NASDAQ index of mostly smaller stocks jumped 3.53 points to 487.17.

“It’s a mixed bag,” said Ron Doran, trader at C. L. King & Associates. “Some volatility is creeping back here, which is a little bit unsettling.”

“I think the markets are still in a consolidation phase,” said A. C. Moore, analyst at Argus Investment Management. “We’re still seeing weakness in various sectors, and this is the type of action one experiences--dead-end rallies.”

The Dow’s morning gains followed a sharp 2.3% overnight rebound in the Tokyo stock market, which has been plagued by a scandal engulfing Japan’s Big Four brokerages. The Nikkei average shot up 512.34 points to 23,121.30, though trading was thin.

At midday today, the Nikkei was off 92.97 points to 23,028.33.

“The worst seems to be over in Japan, at least for the time being,” said Jeff Kaminsky, trader at Mabon Securities.

On Wall Street, meanwhile, investors responded well to some favorable second-quarter earnings reports, though fears remain high that more companies will disappoint with profit reports in the weeks ahead.

Among the market highlights:

* Ashton-Tate soared 4 5/8 to 15 7/8 after the Torrance-based software firm agreed to merge with Borland International in a stock-swap. Borland fell 2 1/4 to 47 3/8.

Another software company, Cadence Design, tumbled 3 5/8 to 15 after saying it expects to post lower quarterly earnings. But tech stocks in general continued their recent rebound. Autodesk jumped 2 1/2 to 52 1/4, Quarterdeck rose 1 to 15, International Rectifier added 1 1/4 to 16 1/2, FileNet gained 3/4 to 16 3/4 and Intel was up 1 1/2 to 46 3/4.

* Among stocks reacting to good earnings reports, Nike rose 1 1/4 to 42 1/2, Federal National Mortgage advanced 7/8 to 51 7/8, Salick Health Care gained 1/4 to 12 1/4 and Vons supermarkets leaped 1 3/8 to 28 7/8.

But Motorola slipped 1 1/2 to 63 3/8 after a disappointing report.

* Agouron Pharmaceuticals jumped 2 1/4 to 16 1/4. The La Jolla drug firm reported success in designing new drug molecules using a computer-aided technique.

In overseas trading, London shares rose sharply because of Wall Street’s rally and a growing belief that there will be a cut in interest rates soon. The Financial Times 100-share average ended 20.5 points higher at 2,508.4.

In Frankfurt, Germany, shares ended a quiet session, with the DAX average rising 7.11 points to 1,634.74.

In Mexico City, the Bolsa index gained 16.52 points to a new record 1,152.35.

Credit

A Treasury auction of seven-year notes helped send government bond prices slightly higher in mild trading.

The Treasury’s 30-year bond gained 3/16 point, or $1.88 per $1,000. Its yield eased to 8.51% from 8.53% on Tuesday.

The only significant economic news was the Treasury’s auction of $9 billion in seven-year notes, which fetched an average yield of 8.26%. It was the highest rate since seven-year notes averaged 8.76% on Oct. 10.

“The results were average, and I think the market breathed a sigh of relief that it wasn’t worse than expected,” said Douglas McAllister, government bond strategist for Prudential Securities.

The federal funds rate, the interest on overnight loans between banks, was quoted at 5.25%, down from late Tuesday’s 5.675%.

Currency

The dollar fell marginally against most major currencies as speculation intensified about German interest rates in advance of a meeting by officials of Germany’s central bank.

Traders said the dollar’s slight fall was partly the result of profit taking but also reflected jitters that the German Bundesbank might raise interest rates after its policy-making council meets. Higher rates in Germany could boost the mark by attracting new investments in German bonds.

In New York, the dollar ended at 1.813 marks, down from Tuesday’s 1.818. Against the Japanese yen, the dollar ended at 138.59, off from 138.76.

Commodities

Prices of platinum futures dropped amid reports that an oil refiner has developed a cleaner-burning gasoline that could reduce demand for platinum in automobile pollution-control systems.

Platinum futures settled $4.10 to $4.60 lower on the New York Mercantile Exchange, with the contract for delivery in July at $379.50 an ounce.

Analysts linked most of the selling to reports that Los Angeles-based Atlantic Richfield Co. plans to unveil today a new gasoline formula designed to cut car emissions sharply.

The platinum market responded with a “knee-jerk reaction” that the fuel would probably reduce the need for platinum, said Bette Raptopoulos, metals analyst with Prudential Securities Inc. in New York. About 40% of the world’s platinum production is used in automobile catalytic converters, which reduce the harmful emissions in auto exhaust.

Elsewhere, gold futures finished 60 to 70 cents higher on New York’s Comex, with July at $370 an ounce; silver was 0.8 cent lower across the board, with July at $4.44.

Refined products led the oil market higher on the New York Merc after the American Petroleum Institute reported strong demand last week for gasoline and petroleum distillates. Light, sweet crude oil settled 8 to 19 cents higher, with August at $21.43 a barrel.