Dow Declines 13.86 on More Profit Taking

Market Overview

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

Stocks ended lower as profit takers nibbled away at the market’s recent record-setting surge.

The Dow Jones industrial average, down 10.07 points Friday, dropped 13.86 points to 3,185.60.

Government bond prices fell on continued selling related to the December employment report and rumors that the Treasury Department will issue more medium-term bonds.

Stocks

Oil and banking stocks were the features of an otherwise subdued session on Wall Street.

Traders said a rally in crude oil prices lured buyers to the battered energy sector. Crude oil prices jumped 56 cents to $18.79 a barrel on the New York Mercantile Exchange on signs that OPEC may cut output.

“It doesn’t take much in the oil price recovery to motivate investors to buy oil stocks,” said Robert Stovall, president of Stovall/21st Advisers. “Oil and gas drilling stocks were in the bottom 5% in relative performance last year.”

Banking stocks, led by Citicorp, edged higher after several banks issued news that was better than Wall Street had expected.

“All the bad news seems to be out on the banks,” said Edward Shopkorn, managing director at Mabon Securities.

In the broader market, declining issues outnumbered advances by 5 to 4 on the New York Stock Exchange.

Big Board volume shrank to 200.42 million shares from 236.13 million Friday.

Market highlights:

* Citicorp jumped 1 1/2 to 12. Its fourth-quarter forecast was within analysts’ expectations. It also announced a management change and said its credit problems had stabilized.

* First Chicago cut its dividend and posted a fourth-quarter loss. Its shares added 3/4 to 24 1/4. Chase Manhattan, which reported fourth-quarter results, gained 1/4 to 20 1/8.

* MCI Communications fell 2 1/8 to 31 3/8. PaineWebber lowered its 1992 earnings estimates on the company.

* Trimedyne added 2 3/8 to 11. It received Food and Drug Administration approval for a laser treatment for spinal disk problems.

* Corning sank 10 1/8 to 68 7/8 over fears about liability suits for its breast implants. Several news reports said Dow Corning Wright, a joint venture of Corning and Dow Chemical Co., rushed the products to market and misled physicians on safety.

* Enzo Biochem jumped 2 1/2 to 5 3/4. The company is introducing eight products to help researchers identify and trace the origins of metastatic cancers.

* Among rising oil shares, Royal Dutch was up 1 1/4 to 81 3/8, Atlantic Richfield added 2 1/4 to 104 1/8, Chevron rose 2 to 68 1/4, Mobil was up 1 to 65 3/8, Elf Aquitaine gained 1 to 33 3/4 and Amerada Hess rose 7/8 to 45 1/2.

Overseas, a scandal involving a key member of the prime minister’s faction helped send Tokyo share prices lower. The 225-issue Nikkei average shed 685.04, or 3.06%, to 21,696.86.

London shares rose, with the Financial Times 100-share average gaining 12.2 to 2,490.1. German shares also ended firmer. Frankfurt’s 30-share DAX average closed up 6.96 at 1,622.67.

Credit

There was no fundamental economic news to drive the market, traders said, so theories varied on the cause of bonds’ decline.

The price of the Treasury’s bellwether 30-year bond was down 17/32 point, or $5.31 per $1,000 in face amount. Its yield was 7.50%, up from from 7.46% Friday.

The federal funds rate, the interest on overnight loans between banks, was 3.875%, unchanged from Friday.

Currency

The dollar fell slightly against most other major currencies in quiet trading that contrasted with last week’s volatility.

In New York, the dollar ended at 1.577 German marks, compared to 1.588 Friday, and at 127.00 Japanese yen, compared to 126.90. The British pound rose to $1.799 from Friday’s $1.789.

Commodities

Wheat futures prices took a sharp turn up on word that farmers have planted far fewer acres of winter wheat than had been expected.

Prices opened a dime a bushel higher, hit contract highs on all deliveries, then closed as much as 15 cents a bushel above Friday’s settlement prices.

The strength in wheat pulled most other grain and soybean futures higher.

On other markets, orange juice and energy futures advanced, and precious metals were lower. Livestock was higher, and pork bellies declined.

On Friday, the Agriculture Department reported a 7% reduction in soft red winter wheat seedings, compared to a year ago. The 50.22 million acres planted in the crop were far below what grain analysts were expecting.

Meanwhile, energy prices moved higher on the New York Mercantile Exchange, with short-term heating oil contracts posting sharp gains. Light, sweet crude oil for delivery in February was 56 cents higher at $18.79 a barrel, and February heating oil was 3.06 cents higher at 54.60 cents a gallon.

Precious metals futures retreated on the New York Commodity Exchange, with February’s contract for gold settling $2.40 lower at $354.50 an ounce and January silver 1.7 cents lower to $4.064 an ounce.

Market Roundup, D10