Dow Up 6 in Mixed Market; Bond Prices Sharply Higher

Stock prices bounced around erratically Friday as the market absorbed the news of a rise in the unemployment rate. However, the bond market took the news enthusiastically, pushing bond prices sharply higher.

The Dow Jones industrial average nudged ahead to a new closing high, but several broader measures of market trends showed losses. Financial stocks showed some of the best gains in a session of quiet trading.

The Dow Jones average of 30 industrials rose 6.46 to 1,885.90, topping the closing peak of 1,882.35 that it reached May 29. For the week, the average added 9.19 points.

Volume on the New York Stock Exchange came to 110.91 million shares, against 110.92 million on Thursday.

Before the opening, the Labor Department reported that the civilian unemployment rate rose 0.2 percentage point to 7.3% last month. The news came as a mild surprise on Wall Street, where analysts had generally been expecting the figures to show little change.

Bond Buyers Encouraged

In the bond market, traders took the news as evidence that the Federal Reserve was unlikely to tighten credit in the near future. The price of the benchmark 30-year Treasury bond rose just under $25 per $1,000 in face amount, with the yield dropping to 7.67% from 7.9% late Thursday.

But stock market investors responded less enthusiastically. Brokers noted that the data didn’t fit with other recent signs that economic activity started picking up in May. Adding to the confusion were suggestions that the unemployment figures were swollen by a larger-than-usual influx of new participants in the labor force, including college students.

Many financial stocks posted gains on the drop in interest rates. Great Western Financial climbed 2 1/2 to 41, Imperial Corp. of America 3/4 to 13 1/2, H. F. Ahmanson 1 to 65 and Green Tree Acceptance 2 7/8 to 57 3/4.

But securities industry stocks declined broadly on projections that earnings for the current quarter would be depressed by reduced stock trading volume and the bond market’s recent slump.

Morgan Stanley fell 1 3/8 to 73 5/8, Paine Webber 3/4 to 37 1/2, Merrill Lynch 1 3/8 to 35 1/8, First Boston 3/4 to 54 and Salomon Bros. to 51.

Getty Petroleum, a regional distributor and retailer of gasoline, gained 2 1/8 to 29 1/8. On Thursday the company reported sharply higher quarterly profits.

Losers Edge Gainers

The Dow Jones transportation average fell 9.12 to 795.38, reflecting weakness in airline issues. Followers of the so-called Dow theory have been concerned lately that the transports have not joined the industrial average at new records and thus have not “confirmed” the advance.

In the daily tally on the Big Board, declining issues outnumbered advances by about five to four.

In the credit markets, long-term issues posted healthy gains and short-term interest rates fell sharply in what some analysts characterized as a renewal of bullish sentiment, which had been subdued in recent weeks by signs of economic revival and bearish comments by finance officials.

The bond market’s gains at week’s end followed skittishness earlier in the week, when interest rates surged higher amid speculation that the Fed might be signaling a tighter credit policy in an attempt to forestall the re-ignition of high inflation.

In the secondary market for Treasury securities, prices of short-term governments rose in the range of 13/32 point to 3/4 point and intermediate maturities rose by up to two points. The 20-year bond gained two points.