Dow Sheds 14 on Inauguration Day : Market Overview

Profit-taking was widespread on Wall Street as investors greeted the inauguration of Bill Clinton. But drug stocks rebounded a bit from their recent slide.

* Interest rates were mixed, with long-term bond yields ending slightly higher in quiet trading.

Stocks

Blue chips were broadly lower, though the depth of most issues’ decline was limited.

Twenty of the 30 stocks in the Dow Jones industrials were down for the day, for example. But the Dow lost just 14.04 points to 3,241.95.

Declining issues outnumbered advances by about 10 to 9 on the Big Board, as volume slipped to 268.79 million shares from 289.40 million Tuesday.

The NASDAQ market, in contrast, closed slightly higher.

President Clinton’s inaugural address contained no specifics on his economic program, though most traders hadn’t expected any.

With many stocks already up sharply since October on expectations of stronger economic growth under Clinton, the market is relegated to a watch-and-wait mode, analysts say.

However, quarterly earnings reports--good and bad--are having significant effects on individual stocks, and that will continue for the next few weeks, traders warn.

Among the market highlights:

* Drug stocks, which have suffered dramatic declines in recent weeks on worries about Clinton’s health care cost-containment plans, rebounded somewhat.

Pfizer rose 2 1/2 to 63 1/2, Merck gained 1/2 to 41 1/4, American Home Products added 1 5/8 to 64 5/8, Warner Lambert was up 5/8 to 64 1/4 and Amgen rose 2 1/2 to 67 1/2.

* Also in the medical group, surgical device maker U.S. Surgical shot up 6 1/2 to 75 7/8 after posting a 33% gain in fourth-quarter earnings. The stock has been hammered in recent months, from a 1992 peak of 134 1/2, on fears of slowing growth.

Elsewhere, Southland-based Tokos Medical, which makes a pregnancy monitoring device, slumped 1 1/4 to a 52-week low of 13 3/4. It had traded as high as 44 3/4 last year.

* California bank and S&L; stocks were mostly hit by profit-taking after surging on Tuesday, after bellwether Wells Fargo reported a 10% decline in problem loans in the fourth quarter.

Wells, up 13 on Tuesday, eased 1 3/4 to 97 1/4. Also falling back were BankAmerica, down 2 to 51 3/8 after jumping 3 7/8 Tuesday; First Interstate, off 2 to 50; and Union Bank, down 1/2 to 31 1/4.

Among S&Ls;, Ahmanson slipped 1/2 to 20, Great Western Financial lost 1/4 to 18 3/4 and Coast Savings fell 1/4 to 13 1/4. All three reported quarterly earnings Wednesday that were mostly as expected.

* Technology stocks were mixed. Computer disk-drive maker Conner Peripherals leaped 3 to 23 1/4 after posting sharply higher quarterly operating earnings. Also, Aspect Telecommunications, which makes call-processing equipment, jumped 2 to 16 on a good profit report.

But Exabyte, another computer parts maker, slumped 2 3/8 to 14 5/8 after reporting a big drop in earnings. And Stratus Computer, a maker of fault-tolerant systems, plunged 3 7/8 to 31 5/8 after two analysts cut earnings estimates.

Elsewhere in the tech group, IBM fell 1 1/2 to 46 7/8--just above its 11-year low of 45 7/8--a day after its dismal quarterly report.

* General Electric, considered a bellwether of the economy, fell 1 1/2 to 82 5/8 in profit-taking, despite reporting a fourth-quarter earnings gain of 7.5%. More important, GE said orders in many of its capital-equipment businesses rose significantly in the fourth quarter.

Overseas, London’s Financial Times 100-share average added 11.1 points to 2,748.7. In Frankfurt, the DAX index slipped 3.95 points to 1,574.88.

Tokyo suffered a bad day, as the Nikkei average tumbled 288.46 points or 1.7% to 16,510.18.

Credit

Bond yields fell early in the day, but closed slightly higher despite President Clinton’s renewed vow to cut the federal budget deficit.

The yield on the Treasury’s 30-year bond inched up to 7.33% from 7.30% Tuesday.

“The market is waiting to see what kind of economic stimulus Clinton will propose and the degree to which he will fight the deficit,” said Douglas McAllister, bond analyst at Prudential Securities.

“Wall Street has been encouraged by what (Clinton’s) said but is waiting to see some action,” McAllister said.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3%, down from 3.25% late Tuesday.

Other Markets

The dollar settled mostly lower in moderate trading on world currency markets, continuing its recent weak trend.

“People want to consolidate their positions while they see what a new (Clinton) regime will bring,” said Randolph Donney, analyst at Pegasus Econometric Group in Hoboken, N.J.

In New York, the dollar fell to 124.63 Japanese yen, down from 125.50 Tuesday. It also fell to 1.604 German marks from 1.611 Tuesday.

Separately, the British pound fell sharply against the German mark following a report showing domestic retail sales fell 0.7% in Britain in December--a new sign of economic weakness.

In commodity markets, oil fell for a third straight day as brokers reacted to weekly industry supply figures and also tried to figure out how calm the Middle East situation would remain.

Light, sweet crude oil for delivery in February dropped 25 cents a barrel at $18.33 on the New York Mercantile Exchange.

After the market closed Tuesday the American Petroleum Institute released weekly supply statistics that traders said put further pressure on crude prices. The trade group said domestic crude oil supplies jumped to 328.1 million barrels from 320.3 million the week before.

Elsewhere, on New York’s Commodity Exchange, near-term gold rose $1.30 to $329.90 an ounce, and March silver rose 4.5 cents to $3.74.

Market Roundup, D6