FINANCIAL MARKETS : Stocks Rally; Bond Yields Hit Record Low : Market Overview

Stocks advanced broadly Thursday in heavy trading, led by media, communication, auto and consumer issues. Most major stock indexes reached new highs.

The Mexican stock market also closed at a new high.

* Long-term bond yields tumbled to new lows on news that wholesale inflation remained in check last month. Gold eased.

Stocks

Analysts said the market was primed for further gains, fueled by takeover mania in media and communications stocks and by the renewed drop in interest rates.

The Dow industrials rose 18.44 points to 3,621.63 on heavy Big Board volume of 352.53 million shares. While the Dow remains below its all-time high of 3,652.09 set on Aug. 25, most broader indexes hit new highs on Thursday.

The Standard & Poor’s 500 index surged 5.34 points to a record 466.83. The Nasdaq composite index of smaller stocks jumped 6.44 points to a record 785.41.

Winners topped losers by about 12 to 9 on the NYSE and 13 to 10 on Nasdaq.

Traders noted that stocks rose sharply across many industry groups, a sign that investor interest in the market is broad-based.

With economic reports continuing to show slow growth with inflation under control, analysts say the market finds many reasons to go up and few to go down.

Among the market highlights:

* Baby Bell stocks soared, one day after Bell Atlantic announced plans to buy cable TV giant Tele-Communications Inc. Analysts said the Bell stocks’ gains reflected investor expectations that all of the companies will move aggressively to acquire new technologies that can boost their growth.

Bell Atlantic rose 1 3/4 to 67 5/8, BellSouth surged 3 3/8 to 60 5/8, Southwestern Bell leaped 3 to 43, Nynex gained 2 1/4 to 45 1/4, Pacific Telesis rose 1 3/4 to 55, US West added 2 1/8 to 49 5/8 and Ameritech jumped 3 3/8 to 87 1/8.

Also, AT&T; rocketed 3 to 60 3/4 and GTE gained 1 1/2 to 38 5/8.

* Cable stocks’ rally continued. TCI rose 1 1/2 to 32 7/8, Viacom A leaped 3 to 65 1/4, Cablevision Systems jumped 2 to 65 5/8, Comcast A added 1 to 40 5/8 and Adelphia surged 1 1/2 to 25 1/4.

* Media-related stocks were up almost across the board. News Corp. soared 3 1/2 to 62, Time Warner rose 1 5/8 to 46 1/2, Gaylord Entertainment jumped 1 3/8 to 28 1/2 and Electronic Arts soared 2 1/4 to 41 1/2.

But investors also began to pick out some losers along the information highway. Video-renter Blockbuster lost 3/4 to 26 5/8.

* Auto stocks were red hot after Chrysler reported stronger-than-expected quarterly earnings. Chrysler soared 3 1/4 to a record 51 3/4, Ford gained 2 1/4 to 57 1/2 and GM rose 1 1/8 to 44 3/4.

* Classic growth stocks roared to life, as Wall Street reconsidered their earnings potential, despite cautious consumer spending. Kellogg jumped 3 3/8 to 52 3/4, Quaker Oats leaped 3 1/8 to 69 7/8, Coca-Cola was up 2 to 44 1/8 and Procter & Gamble zoomed 2 1/4 to 52 1/4.

* Utilities rebounded somewhat from recent losses. The Dow utilities index jumped 3.03 points to 243.54, helped by falling interest rates.

But bank stocks were hit hard, despite many strong earnings reports from the companies. Wells Fargo tumbled 5 3/4 to 125 7/8, Citicorp sank 1 1/4 to 38 3/8, First Union dropped 2 1/8 to 44, Nationsbank eased 1/2 to 51 3/4 and Mellon Bank lost 3/4 to 57 3/8.

Overseas markets were mixed. Frankfurt’s DAX index lost 11.44 points to 1,990.07, while in London the FTSE-100 index added 5.4 points to 3,086.3.

In Tokyo, the Nikkei average inched up 44.41 points to 20,082.81.

In Mexico City, the Bolsa index rose 6.77 points to a new record 1,950.81, just eclipsing the old peak of 1,949.51 set on Sept. 7.

Early today in Asia, Hong Kong, Singapore and Kuala Lumpur stock indexes all hit new highs.

Credit

News of a small rise in inflation in September helped push long-term bond yields to record lows.

The 30-year Treasury bond yield dropped to 5.85% from 5.91% Wednesday. The new yield is the lowest since the Treasury began selling 30-year bonds in 1977. The prior low was 5.86% set on Sept. 8.

Shorter-term yields also sank, though not as sharply.

The government said wholesale inflation edged up 0.2% in September. Economists had expected a rise of 0.3%. Although it was the first increase in five months, wholesale prices so far this year have risen at only a 0.8% annual rate, or half of 1992’s modest 1.6% pace.

“Whatever way you slice it, it’s good news for the market,” said Frank Sannella, money market analyst at Technical Data in Boston.

Many investors believe that low inflation could allow interest rates to continue falling, assuming economic growth stays slow.

Another report Thursday underscored the sluggish nature of the economy: Retail sales inched up 0.1% in September. Economists had predicted a 0.3% increase.

Today the government will release consumer price inflation figures for September.

Other Markets

Silver fell sharply as the low inflation report killed investors’ appetite for the metal. Gold also eased.

On the New York Comex, silver for current delivery closed at $4.33 an ounce, off 8.3 cents. Gold slipped 90 cents to $365.30 an ounce.

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

In currency trading, the dollar staged a surprise rally despite the economic reports. It closed at 1.613 German marks in New York, up from 1.602 Wednesday. It also closed at 107.33 Japanese yen, up sharply from 105.94.

Market Roundup, D8