Stocks Close Best Week in 6 Months; Dow Gains 5.63

The stock market capped off its best and busiest week since last summer with another gain Friday.

Financial-services stocks were among the standouts as advances outnumbered declines for the 15th consecutive session on the New York Stock Exchange.

The Dow Jones average of 30 industrials rose 5.63 to 1,276.06, bringing its gain for the week to 48.70 points. That marked the best weekly showing for the average since it jumped a record 87.46 points last July 30 to Aug. 3.

Friday’s Big Board volume totaled 122.44 million shares, down from 160.74 million Thursday.

Average daily volume for the week was 149.84 million, just short of the record of 150.89 million set last Aug. 6 to 10.

After the close Thursday, the Federal Reserve reported a larger-than-expected $2.8-billion drop in the basic measure of the money supply for the week ended Jan. 14.

As many traders interpreted them, those figures seemed to leave ample room for the Fed to stick with its recent relaxation of monetary policy.

Falling interest rates lately have reduced the competitive appeal of interest-bearing investments in comparison to stocks.

A less positive note was sounded Friday, however, when the Commerce Department reported that new orders for durable goods fell 2.1% last month. They had risen 8.3% in November.

After dropping sharply in the credit markets Thursday, interest rates on government bonds backed up slightly in Friday’s activity.

Financial-services stocks were broadly higher, responding to the recent strength of the securities markets. Merrill Lynch gained 1 to 33; Phibro-Salomon rose 2 to 39 1/8; E. F. Hutton rose 1 3/4 to 34 1/2; Paine Webber gained 1 1/8 to 34 5/8; American Express was up 7/8 at 40 3/4, and First Boston rose 3/8 to 59 1/2.

Phillips Petroleum led the active list, rising 3/4 to 48 3/4 on volume of more than 2.9 million shares. Minneapolis investor Irwin L. Jacobs said he was actively involved in trading of the stock.

Expectations of lower interest rates helped prompt gains in such stocks as the regional telephone holding companies and Federal National Mortgage, which climbed 1 1/8 and was heavily traded for the second straight day.

The federal funds rate, the interest on overnight loans between banks, traded at 8.475%, down from 8.5% late Thursday.

Bond prices opened higher but then fell back in what analysts attributed to profit taking.

Yields on 30-year Treasury bonds were 11.19%, unchanged from late Thursday.

In corporate trading, industrials and utilities fell point in moderate trading.

Among tax-exempt municipal bonds, general obligations fell point in light activity and revenue bonds were off a full point in moderate trading.