STOCKS : Dow Loses 4.70, but Broader Market Gains

A record slide in the oil market sent most stocks higher Monday, but blue chips failed to keep pace.

The Dow Jones industrial index closed down 4.70 points at 2,516.09. It was off more than 35 points early in the day.

But the broader market was happier with the $5.41-a-barrel plunge in oil prices. Advancing issues on the New York Stock Exchange outnumbered losers by 837 to 723. Big Board volume was a moderate 152.65 million shares, down from Friday’s 221.48 million.

Analysts said the decline in blue chips reflected a typical reversal of the market after large gains Friday, when various stock options and futures expired, helping boost the Dow by 68 points.

“A lot of times after a run-up Friday, you get a selloff the following session,” said Jim Toth, head of equity trading at McDonald & Co.

But oil’s slide helped bring in some buyers, and traders also were buoyed by hopes of an imminent budget pact in Washington. Negotiators said they were optimistic that an agreement will be reached before the Thursday deadline.

Small stocks led the advance, as the NASDAQ over-the-counter composite gained 3.76 points, or 1.1%, to 341.12. Still, some analysts said the overall market’s narrow margin of winning stocks versus losers was disappointing, considering what happened with oil prices. That could bode poorly for a continuation of the rally.

Among the market highlights:

* Airline stocks rose as oil fell. Delta gained 1 7/8 to 62 1/4, AMR (parent of American Airlines) rose 1/2 to 48 1/2, USAir added 1 1/8 to 18 1/4 and Southwest was up 1 to 17 5/8.

* Recently battered technology stocks paced the rally. NCR soared 3 to 49 7/8, Digital Equipment climbed 2 to 51 3/4 and Sun Microsystems rose 1 1/2 to 22 7/8. Among Southland companies, AST Research jumped 1 3/8 to 20, Advanced Logic gained 3/4 to 7 3/4 and Micropolis rose 5/8 to 6 1/4.

* Conner Peripherals added 1 5/8 to 21 5/8 after reporting strong third-quarter earnings. Applied Magnetics rose 5/8 to 8 1/4 on its report of a 9-cents-a-share profit in the latest quarter, versus a loss a year ago.

* MCA lost 1/2 to 57 1/4, after trading as low as 54 1/2. There is growing concern the firm’s merger talks with Matsushita Electrical might fall through.

* Westinghouse fell 1 1/4 to 25 after Oppenheimer & Co. recommended that investors switch from Westinghouse to GE. But GE dipped 1 3/4 to 53 3/4 after a Barron’s article raised questions about GE Capital’s financial exposure. GE called the article “misleading.”

* Lilly gained 1 3/4 to 75 3/4. Paine Webber reiterated a buy rating. Other drug stocks that were strong included Johnson & Johnson, up 7/8 to 68 1/4; Schering-Plough, up 1 3/8 to 49, and Amgen, up 2 1/8 to 45 7/8.

* Defense stocks racked up another day of gains. Lockheed advanced 1 5/8 to 27 1/4 and McDonnell Douglas rose 2 3/8 to 52 5/8.

* Beaten-down casino stocks rallied. Caesars World rose 1 to 15, Golden Nugget gained 3/4 to 18 1/8 and Circus Circus added 1 3/4 to 43.

In Tokyo, stocks closed higher, marking the first time in 1990 that the Nikkei index has chalked up gains for six consecutive days. The key 225-share index ended up 589.37 points at 25,070.86.

Stocks ended higher in London, with sentiment bolstered by a narrowing of the British trade deficit, lower oil prices and a better-than-expected Wall Street opening. The Financial Times 100-share index finished 13 points higher at 2,102.0.

German shares closed mixed after a day of directionless trading. The 30-share DAX index ended 7.58 points lower at 1,474.51.

CREDIT: Bond Prices Register Very Little Change

Bond prices closed virtually unchanged in trading influenced by profit taking. The market ignored the plunge in oil.

The price of the Treasury’s bellwether 30-year bond was unchanged, as was its yield, which remained at 8.75%. Analysts said yields rose in early trading, then stabilized.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 7.813%, unchanged from Friday.

CURRENCY: Greenback Gains on Other Currencies

The dollar strengthened Monday against all major currencies in worldwide trading.

Traders said internal market influences were largely responsible for the dollar’s gains, noting that the dollar was ripe for a bounce back after its recent rapid decline.

The plunge in oil prices helped the yen, because Japan is heavily dependent on oil imports, dealers said. They said the dollar was indirectly boosted by subsequent cross-trading between the yen and other currencies.

In New York, the dollar traded at 126.01 Japanese yen, up from 125.95 Friday. Against the German mark the dollar rose to 1.518 from Friday’s 1.502.

Late dollar rates in Europe compared to Friday: 1.5135 German marks, up from 1.5040; 1.2800 Swiss francs, up from 1.2700; 5.0662 French francs, up from 5.0380; 1.7060 Dutch guilders, up from 1.6940; 1,134.25 Italian lire, up from 1,127.00, and 1.1725 Canadian dollars, up from 1.1675.

COMMODITIES: Gold Dips, but Not as Much as Expected

Gold futures prices fell on New York’s Commodity Exchange, but analysts said the metal held up well against the record-breaking plunge in oil prices.

On other commodity markets, livestock and meat futures fell, and grains and soybeans were mixed.

Gold futures settled $3.20 to $3.40 lower in New York, with the contract for spot delivery at $369.60 an ounce; silver ended 6.4 cents to 6.9 cents lower, with the spot contract at $4.19 an ounce.

Gold and oil prices often move in sync, because rising oil prices send investors looking for an inflation hedge. But gold did not respond as strongly to oil’s recent gains, as many observers expected. And on Monday, gold did not fall as sharply as the conventional wisdom would dictate.