Dow Continues to Advance; Energy, Bank Stocks Revive

The stock market struggled to a small gain in quiet trading Friday, capping off its second straight advancing month.

The Dow Jones average of 30 industrials rose 7.31 to 2,223.99, reducing its loss for the week to 11.25 points.

For February, the average recorded a 65.95-point gain on top of its 262.09-point upsurge in January.

Friday’s volume on the New York Stock Exchange slowed to 142.80 million shares from 165.80 million in the previous session.

Analysts said investors were encouraged by the continued strength of smaller “secondary” stocks lately, even as many of the big-name blue chips have bogged down.

But they also noted cause for pause in some of the recent economic news. On Thursday, the Commerce Department reported a large drop in new orders for durable goods during January.

Friday morning, the Labor Department said its revamped consumer price index rose 0.7% in the same month, for its biggest increase since June, 1982.

American Express Up

Wall Streeters had been expecting a pickup in the reported inflation rate, given the rise in energy prices that occurred early in the year. Lately, oil prices have turned downward again.

American Express rose 1 to 74, propelled by persistent speculation that the company might be considering spinning off its Shearson Lehman Bros. subsidiary.

Weyerhaeuser climbed 2 5/8 to 52 1/8, also in active trading. The company said it wouldn’t comment, as a matter of policy, on the activity.

Purolator Courier, which said it had received a takeover bid from a suitor it didn’t identify, jumped 3 3/8 to 35 1/8, registering one of the day’s biggest percentage gains.

Energy stocks, under pressure lately as oil prices fell, recovered some of their recent losses. Exxon gained 1/2 to 78 3/8, Chevron rose 3/4 to 49 1/2, Amoco climbed 1 to 71 7/8, Atlantic Richfield advanced 3/4 to 67 and Occidental Petroleum added 1/2 to 31 7/8.

Bank issues, likewise, bounced back from selling earlier in the week that had been prompted by international debt worries. Citicorp picked up 5/8 to 53, Manufacturers Hanover gained 1 to 45 3/8, Chemical New York rose 1 to 46 1/2 and Chase Manhattan climbed 3/4 to 38.

Winners Outpace Losers

Advancing issues outnumbered declines by about five to four in the daily tally on the NYSE, with 859 up, 676 down and 430 unchanged. The exchange’s composite index gained 0.60 to 162.01.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,774, compared to 3,059.

Standard & Poor’s index of 400 industrials rose 1.25 to 3.22.79, and S&P;’s 500-stock composite index was up 1.24 to 284.20.

The Wilshire index of 5,000 equities closed at 2,867.806, up 11.653.

The NASDAQ composite index for the over-the-counter market, up 2.04 at 424.97, and the American Stock Exchange market-value index, up 1.41 at 321.76, continued to set new highs.

In the credit markets, bond prices finished mostly higher in light to moderate trading, undaunted by the government’s negative reports of the surge in consumer prices and the bulging trade deficit in January.

The Treasury’s closely watched 30-year issue rose 3/8 point, or $3.75 per $1,000 face value. That reduced its yield to 7.46% from 7.49% late Thursday. Corporate and municipal bonds were unchanged to higher.

The news on inflation and the trade deficit “should have been a double-whammy,” said Ward McCarthy, senior money-market economist for Merrill Lynch Capital Markets.

But the discouraging economic news didn’t upset the bond market, which took its cue from the unruffled foreign exchange markets, analysts said. There had been concern that a strongly negative trade performance, for example, could knock the dollar sharply lower against other major currencies, unsettling the bond market.

A weak dollar worries bond investors because it makes dollar-denominated fixed-rate securities, such as bonds and notes, less attractive to foreign investors.

Dollar Held Firmly

“What’s probably the key here was the dollar held very firmly,” said Merrill Lynch’s McCarthy.

A steep drop in the dollar would have tested the resolve of the major industrial powers to support the U.S. currency, if need be, by intervening in the currency market to stabilize exchange rates.

“A lot of traders were surprised that the (bond) market had the strength it did,” said Jay Goldinger, an investment broker for Cantor, Fitzgerald & Co. in Beverly Hills. “The market couldn’t go down on relatively bad news.”

Analysts said bond prices were also buoyed by the continued drop in oil prices. In trading Friday on the New York Mercantile Exchange, futures contracts for April delivery of West Texas Intermediate, the U.S. benchmark crude oil, tumbled 18 cents to finish at $16.60 per 42-gallon barrel. The loss extended a sharp decline in oil prices that began earlier this week.

The federal funds rate, the interest charged on overnight loans between banks, was quoted late in the day at 6.063%, up from 5.938% Thursday.

T-Bill Yields Drop

Meanwhile, yields on three-month Treasury bills slipped 1 basis point to 5.45%. Six-month bills were unchanged at 5.44%, while one-year bills eased 2 basis points to 5.57%, according to investment firm Salomon Bros. A basis point is one-hundredth of a percentage point.

In the secondary market for Treasury bonds, prices of short-term government issues rose 1/32 to 3/32 point, intermediate maturities gained 1/16 to 7/32 point, and 20-year issues were up 5/16 point, Salomon Bros. said. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrials rose 1/8 to point in moderate dealings and utilities were unchanged in light activity.

Among tax-exempt municipal bonds, general obligations were stable and revenue bonds gained 1/8 to point in light to moderate trading.