Dow Up 3.24 as Autos, Rails Lead Rally : Market Overview

* Industrial and rail issues led the market higher after some upbeat economic news, though many technology issues were hit by profit taking. Trading was heavy, skewed by options expirations.

* More favorable news on inflation helped push long-term interest rates lower for a second day. There were also rumors of imminent European interest-rate cuts.

Stocks

The government’s report that industrial production was up 0.3% in December, the third straight rise, helped buoy the increasingly popular view that the economy is recovering nicely.

Wall Street responded with a rally in many industrial stocks that had lagged in recent weeks.

By the close, the Dow Jones industrial average added 3.24 points to 3,271.12, extending its gain for the week to 19.45 points.

But the rally was much stronger than the Dow suggested: Advancing issues outnumbered losers by more than 2 to 1 on the New York Stock Exchange. And the NASDAQ composite index reached a new record 697.15, up 1.45 points.

Trading, swelled by expirations of key stock options contracts, set its heaviest pace in four weeks. NYSE volume came to 309.72 million shares.

Wall Street’s optimism about the economy was enough to overcome some bad news on the trade front--a weak November export report. Investors appear to be betting that a stronger domestic economy will make up for U.S. companies’ lost sales in weaker overseas markets.

Among the market highlights:

* Auto stocks led the industrial rally. Chrysler jumped 1 3/8 to 36 3/8, Ford Motor gained 1 1/4 to 46, and GM added 5/8 to 34 5/8.

Other industrial winners included ITT Corp., up 1 1/4 to 71 1/2; Caterpillar, up 1 1/4 to 56 3/4; Georgia-Pacific, up 2 5/8 to 58; Trinova, up 1 to 23 5/8; MagneTek, up 1 1/8 to 23 7/8, and Deere, up 1 5/8 to 45 3/8.

* Railroad and shipping issues also surged. Conrail jumped 1 5/8 to 51, CSX Corp. gained 1 7/8 to 75 1/4, Burlington Northern added 1 to 44 3/8, and XTRA leaped 1 5/8 to 67 3/8.

* Technology stocks, the week’s hottest story, were mixed as some traders took profits. Apple fell 4 3/4 to 60 1/4 after its quarterly earnings came in slightly below expectations of some analysts.

Also falling back were Intel, off 1 to 111 3/4; Microsoft, down 1 1/2 to 89 3/4; Motorola, down 2 to 121 1/4; Cisco Systems, off 2 5/8 to 86 7/8, and Compaq, which eased 1 to 52 3/4.

* Many financial issues continued to gain. Citicorp rose 3/4 to 23, PNC Financial added 3/4 to 29 5/8, Wells Fargo jumped 3 1/2 to 85 1/4, and City National gained 1 to 9 1/8.

Also, annuity marketer Broad Inc. soared 1 1/4 to 29 3/8. It announced plans to sell new preferred shares to finance potential acquisitions.

* Torrance-based International Technology zoomed 1 1/8 to 7 1/4. The firm is part of the team selected by the government to clean up the Hanford, Wash., nuclear dump.

Overseas, Frankfurt’s DAX index rose 20.81 points to 1,544.55. London’s Financial Times 100-share index added 5.9 points to 2,765.1. Tokyo was closed for a holiday.

Other Markets

Interest rates eased across the board after the government reported that consumer inflation last year was 2.9%, lowest since 1986.

Low inflation is leading some investors to conclude that interest rates have further to fall, even if the economy grows. Rumors that new interest-rate cuts in Europe may be imminent also helped.

By the close, the yield on the Treasury’s 30-year bond was at 7.35%, versus Thursday’s 7.39%.

In commodity markets, lumber futures jumped to another record high on the Chicago Mercantile Exchange, but the market’s erratic behavior indicated that the forces behind the 2-month-old rally may be weakening, despite continuing supply worries.

Spruce two-by-fours for January gained $11.20 to $326.70 per 1,000 board feet.

Elsewhere, light, sweet crude oil rose 17 cents to $18.87 a barrel on the New York Merc. On the Comex, gold slipped 30 cents to $327.00 an ounce; silver fell 0.7 cent to $3.67.

The dollar closed higher, helped by European rate-cut rumors. In New York, the dollar finished at 126.10 Japanese yen and 1.636 German marks, up from 125.85 yen and 1.625 marks Thursday.

Dow Jones Industrials

Markets at a Glance

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