FINANCIAL MARKETS : Dow Up 18.4; Nasdaq Hits 4th Straight High : Market Overview

Boosted by further takeover speculation involving the cable and communications sector combined with strength in automotive and consumer issues, stocks climbed to new heights in brisk trading Thursday.

* Long-term Treasury bond yields tumbled to new lows, boosting prices sharply higher in a market rally stoked by news that wholesale inflation remained in check last month.

Stocks

The drop in long-term interest rates set a positive tone on Wall Street, while periodic rounds of computer-guided program buying augmented the upward momentum in the market.

The Dow Jones industrials rose 18.44 to 3,621.63 on Big Board volume of 352.53 million shares. On Wednesday, 290.90 million shares were traded.

The Nasdaq electronic market’s composite index set a fourth consecutive closing record. It shot up 6.44 beyond Wednesday’s closing record to 785.41.

Advancing issues outnumbered declines in the broader market by better than 5 to 4.

Government economic readings released before trading began helped get the market off to a good start.

The producer price index, which measures inflationary pressures at the wholesale level, edged up 0.2% in September. Economists had expected an increase of 0.3%. Although it was the first increase in five months, wholesale prices so far this year were rising at only a 0.8% annual rate, or half of 1992’s modest 1.6% pace.

Another report, which underscored the sluggish nature of the economy’s growth, showed retail sales inched up a barely perceptible 0.1% in September, even though economists had predicted a 0.3% increase,

A third report said weekly claims for unemployment benefits rose by 8,000 last week to 329,000. The small increase followed two straight weekly declines that had pushed the claims level to their lowest point in nine months.

Among the trading highlights:

* Automotive stocks were among the biggest gainers. Chrysler jumped 3 1/4 to 51 3/4 on heavy volume of more than 5.8 million shares after reporting unexpectedly robust third-quarter earnings. Ford gained 2 1/4 to 57 1/2 and General Motors moved 1 1/8 higher to 44 3/4.

* The NYSE’s list of active stocks featured several consumer products companies. Philip Morris was the volume leader on turnover of more than 8.5 million shares; it rose 7/8 to 52 3/8. Coca-Cola jumped 2 to 44 1/8.

* Cable, media, entertainment and other communications issues continued to attract buyers betting that the plan to meld Bell Atlantic, Tele-Communications and Liberty Media will not be the last such megadeal in the industry. The Nasdaq market’s list of heavily traded stocks was studded with communications-related issues.

* Even though there were no major surprises, bank stocks generally declined, with the selling most pronounced in large banks that have yet to report earnings. Citicorp was off 1 1/4 at 38 3/8 and Wells Fargo & Co. dropped 5 3/4 at 125 7/8.

Meanwhile, financial markets overseas were mixed. Frankfurt’s 30-share DAX averaged lost 11.44 points to close at 1,990.07, while in Tokyo, the 225-share Nikkei average ended up 44.41 points at 20,082.81. London’s Financial Times 100-share average closed at 3,086.3, up 5.4 points.

Credit

Bond investors, usually wary of high inflation because it reduces the value of fixed-income investments, were pleased by the producer price index.

“Whatever way you slice it, it’s good news for the market,” said Frank Sannella, money market analyst at Technical Data in Boston. “The retail sales figure was really gravy.”

The Treasury’s main 30-year bond yield plunged to 5.85% from 5.91% Wednesday, boosting its price 13/16 point or $8.13 per $1,000 in face value. Interest rates decline when bond prices rise.

It was the lowest yield since the Treasury began regularly auctioning bonds in 1977. The previous low was set Sept. 8, when the yield closed at 5.86%.

But prices of other maturities posted smaller gains. Short-term Treasury securities rose by up to 3/32 point and intermediate maturities increased 1/4 point to 15/32 point, the Telerate Inc. financial information service reported.

Analysts said that many investors were selling these maturities to buy longer-term bonds, which have been leading the market’s recent rally.

Some analysts said bond market prices potentially could have another sharp reaction today, when the government releases September figures on consumer inflation.

The federal funds rate, the interest on overnight loans between banks, was 2.9%, up from 2.5% late Wednesday.

Other Markets

Silver futures prices fell sharply as the low inflation and retail sales reports killed investors’ appetite for precious metals. Gold prices also retreated in futures trading.

On the New York Comex, silver for current delivery closed at $4.330 an ounce, off 8.3 cents. Also on the Comex, gold for current delivery closed at $365.30 an ounce, off 90 cents from Wednesday.

Elsewhere, light sweet crude oil for November delivery fell 14 cents on the New York Mercantile Exchange to $18.50 a barrel.

In currency trading, the dollar rose against most major currencies in technically driven trading after the Japanese central bank reportedly bought dollars to support the U.S. currency.

Market Roundup, D6