Late Buying Lifts Dow 10.24; Yields Doze : Market Overview

Highlights of Thursday’s market activity, compiled from Times staff and wire reports:

* A series of afternoon buying waves lifted blue chips, but many traders were sidelined awaiting “triple witching” today. Airline and technology stocks were broadly lower on earnings worries.

* After a small flurry of bond buying, Treasury yields closed mostly unchanged. One government report renewed inflation worries.

* The dollar rebounded despite a bearish U.S. trade deficit report.

Stocks

After staying virtually in neutral for much of the session, the Dow industrials shifted into gear in the final two hours of trading, driven by futures-related buy programs.

The buy programs came on the eve of today’s “triple witching” quarterly expiration of key stock index futures and options contracts. The market frequently is volatile leading up to these expirations, which force traders to unwind complex market bets made with stocks, futures and options.

The Dow ended the day up 10.24 points at 3,521.89. Advancing issues outnumbered decliners by about 9 to 8 on the New York Stock Exchange. Volume slowed to 239.8 million shares.

Analysts said the market’s cautious tone was also affected by posturing on Capitol Hill over President Clinton’s economic plan and by concerns over second-quarter corporate earnings.

On the latter front, Wall Street has begun to be hit with the usual round of end-of-quarter announcements about earnings shortfalls. However, expectations are that corporate profit growth overall is continuing at a moderate pace this quarter.

Among the market highlights:

* Airline stocks led the losers’ list after American Airlines parent AMR warned that second-quarter results will be below analysts’ projections. That followed USAir’s surprise disclosure Wednesday of a probable second-quarter loss.

AMR, which sank 2 1/4 on Wednesday, tumbled 4 1/4 to 61 1/2. USAir, down 1 3/4 on Wednesday, slid 1 1/4 to 15 7/8. Other losers included Delta, off 1 3/8 to 48 1/2, and United Airlines parent UAL, down 5 1/2 to 121 1/2.

* Technology stocks were weak on concerns that computer sales may be slowing from the torrid levels of recent quarters. Hewlett-Packard fell 2 3/8 to 81, Sun Microsystems eased 7/8 to 29 1/4, Apple dropped 1 to 41 1/4, Cabletron Systems sank 3 to 103 1/2 and Digital Equipment fell 1 5/8 to 40 3/4.

* Other stocks that fell on fears of lower than expected earnings included Toys R Us, off 1 7/8 to 37 1/8, and restaurateur Longhorn Steaks, which plummeted 7 7/8 to 11 5/8.

Longhorn, an Atlanta-based steakhouse chain, said its quarterly earnings will be about 25% below expectations because of higher food costs and slower sales. Its woes hurt other steakhouse stocks: Outback Steak sank 2 1/8 to 30 5/8 and Lone Star Steakhouses fell 1/2 to 26 after trading as low as 24 1/2.

* On the upside, bargain hunters moved on many industrial stocks, contradicting the airlines’ suggestion of slowing economic growth. Georgia-Pacific jumped 1 5/8 to 58 7/8, Temple-Inland leaped 1 3/4 to 43 1/2, Cooper Tire gained 1 7/8 to 24 7/8, Phelps Dodge added 3/4 to 44 1/8, Alcoa rose 1 to 66 3/4 and Tenneco was up 5/8 to 47 3/4.

* Other winners included Pepsico, which rose 1 1/4 to 36 7/8 on news that claims of tampering with Pepsi soft drinks were thus far unfounded, and casino firm Circus Circus, which climbed 1 7/8 to 60 3/8 after declaring a 3-for-2 stock split effective July 9.

Overseas, stocks ended mixed in Tokyo. The Nikkei index rose 23.09 points to 19,925.51. But early today, the market’s slide continued as the Nikkei sank 247.37 points to 19,678.14 by midday. In Frankfurt, the DAX index rose 2.73 points to 1,692.29. London’s FTSE-100 index lost 7.3 points to 2,875.7.

Credit

Reports of weaker economic conditions, including a wider U.S. trade deficit in April, initially pushed bond yields modestly lower. But some short-term signs that inflation may be perking up muted the market’s optimism.

By day’s end, the yield on the Treasury’s 30-year bond was unchanged from Wednesday’s 6.81%.

One key sign of economic weakness came in a report by the Federal Reserve Bank of Philadelphia, which said its June indexes of business conditions and employment fell sharply compared to May.

But the Labor Department said unit labor costs jumped 5% in the first quarter, suggesting renewed inflationary pressures despite the slow-going economy. That put a damper on bond buying.

Other Markets

The dollar tumbled in early trading after a report that the nation’s overall trade deficit in April swelled to its highest level in four years: $10.49 billion.

A rising trade deficit normally is a sign of long-term structural problems in an economy. But the dollar rebounded later as traders viewed the initial decline as a buying opportunity.

In New York, the dollar closed at 107.30 Japanese yen and 1.659 German marks, up from Wednesday’s 106.45 yen and 1.658 marks.

Fears that Iraqi oil might soon begin flowing sent light, sweet crude for July down 14 cents to $18.70 a barrel on the New York Merc.