Dow Slips 23.10 on a Surge in Jobless Claims : Market Overview

* The Dow Jones industrial average fell 23.10 points to 3,368.88 after the government reported a jump in unemployment claims.

* Bond prices slid after the Federal Reserve failed to take immediate action to lower short-term interest rates.

Stocks

The jump in unemployment claims for a second straight week not only pummeled the Dow, but the broader market as well.

Declining issues outnumbered advances 13 to 6 on the New York Stock Exchange. Volume on the Big Board was 187.70 million shares, up from 171.60 million the previous session.

“The perception the recovery is still fitful is holding the market back,” said Jack Solomon, an analyst with Bear, Stearns & Co.

Analysts added that many investors are putting off buying stocks in the belief that the Federal Reserve will ease interest rates again to keep the economy from slipping back into recession. Such a cut could help stock prices.

The market fell despite the good news of better-than-expected business inventories. The Commerce Department said inventories rose 0.4%, well above the 0.1% economists had forecast.

Market highlights:

* The most-actively traded issue on the NYSE was Advanced Micro Devices, which slid 1 7/8 to 15 5/8 after a rival said it will cut prices on an advanced computer chip.

* Other active issues included Gap, down 3 5/8 to 37 1/4 after analysts lowered the company’s 1993 earnings estimates; Limited, down 1 1/8 to 21 on poor earnings; Nike, off 4 1/2 to 60 7/8 on negative analysts’ comments; Citicorp, up 3/8 to 20; Merck, down 2 to 145 7/8, and Newmont Gold, up 2 7/8 to 41 1/2.

* Among blue chips, IBM fell 5/8 to 91 3/4, AT&T; rose 1/4 to 43 1/8, General Motors slipped 1/2 to 39 3/8, and J. P. Morgan dropped 7/8 to 55 5/8.

* Cray Research plunged 5 3/4--or 14.9%--to 32 3/4 after saying it expects lower earnings this year.

* Tiffany & Co. was down 4 1/2--or 10.7%--to 37 5/8 on poor earnings.

* Microsoft dropped 2 to 110 3/4 in over-the-counter trading.

Overseas, London shares ended sharply lower because of weakness on Wall Street, a steep fall in futures markets and disappointing earnings from the U.S.-British conglomerate Hanson.

German stocks dropped for the third session in a row as a threatened strike in the engineering industry loomed. Frankfurt’s 30-share DAX index slipped 7.16 points to 1,742.26.

In Tokyo, the 225-share Nikkei average edged up 36.03 points to 18,804.60.

Credit

The price of the bellwether 30-year Treasury fell 1/4 point, or $2.50 per $1,000 in face amount. Its yield rose to 7.86% from 7.84% Wednesday.

Bonds were sold in the afternoon “when it became very clear the Fed had not eased” interest rates, said Steven A. Wood, an economist at BankAmerica Capital Markets Inc. in San Francisco.

Traders had interpreted a Fed move to add reserves to the banking system late Wednesday as a sign of a possible imminent rate cut. But the central bank signaled Thursday that the action was technical in nature and did not herald a reduction.

Economists now are looking for an interest rate drop Tuesday at the earliest, when an important Fed committee meets.

The federal funds rate, the interest on overnight loans between banks, was 4%, unchanged from Wednesday.

Currency

The dollar rebounded against most currencies in light trading as markets continued to focus on the outlook for interest rates.

Traders said there was also concern about the level of the U.S. money supply.

After the close of currency trading, the Federal Reserve reported that the money supply rose a larger-than-expected $10.5 billion during the week ended April 27. That compared to an increase of $5.9 billion the previous week.

The feeling is that interest rates will go lower if the money supply shows weakness, said Earl I. Johnson, a vice president at Harris Trust & Co. in Chicago.

The dollar rose to 130.15 Japanese yen in New York from 129.60 Wednesday. It climbed to 1.6115 German marks from 1.6090. The British pound fetched $1.8215, down from $1.8275.

Commodities

Lumber futures prices skyrocketed for the second day in a row on speculation that the government will take another step toward imposing duties on Canadian imports.

On other commodity markets, wheat and soybeans futures fell; precious metals rose; oil futures fell, and livestock and meat futures were mixed.

Lumber for delivery in May surged $7.20 on the Chicago Mercantile Exchange to $248.50 per 1,000 board-feet. May futures rose $5 Wednesday.

The jumps were largely a reaction to the Commerce Department’s announcement that it was moving up to today its final ruling on whether--and to what extent--Canada unfairly subsidizes lumber exported to the United States. The ruling had not been expected until Wednesday.

Analysts said the agency probably will uphold a preliminary decision in March that subsidies have lowered the price of Canadian lumber in the United States by 14.5%, and to recommend that an equivalent duty be levied on Canadian imports.

Oil prices fell on the New York Mercantile Exchange amid speculation that Saudi Arabia will try to push OPEC’s production ceiling higher. Light, sweet crude for delivery in June dropped 21 cents to $20.55 per barrel.

On New York’s Commodity Exchange, June gold rose $2.30 to $338.40 an ounce. May silver rose 2.1 cents to $4.107.