Heavy Witching Hour Sales Leave Market Mixed; Dow Closes Up 1.33

Wall Street’s blue chip index recorded a post-crash closing high Friday, but its final tally was below the 2,100 level reached earlier because of selling tied to the Triple-Witching Hour, leaving the market mixed.

The Dow Jones industrial index, which rose 21.72 points Thursday, finished up 1.33 points, at 2,087.37. For the week, the index advanced 52.39 points.

New York Stock Exchange volume was a busy 248 million shares, the second highest of the year, eclipsed only by the 275.2 million traded Jan. 25. But declining issues outnumbered advances by about 8 to 7 on the New York Stock Exchange, with 716 up, 807 down and 461 unchanged.

A sudden drop in bond prices at mid-afternoon, traders said, also helped to derail the rally, which saw the Dow index reach a high of 2,100.63. A Federal Reserve report forecasting moderate growth for the U.S. economy seemed to rule out any near-term easing of interest rates, traders said.

“It was a bizarre day,” one trader said. “There was a powerful buying rally in the morning that brought it right up to 2,100 and then the bond market brought us right back down, and here we are, closing almost unchanged. I’m mystified.”

Stocks had been strong this week, helped by Thursday’s U.S. trade deficit report which showed the shortfall for January at the low end of forecasts at $12.44 billion.

But traders said selling developed Friday in connection with triple-witching, a quarterly event involving concurrent expirations of stock index futures contracts, options on those contracts and options on individual stocks. Activity was swollen by the quarterly witching hour.

Many analysts remain cautious. Eugene Peroni Jr., technical analyst at Janney Montgomery Scott in Philadelphia, called the short-term outlook for blue chip stocks “positively biased,” but said activity among those issues remains “erratic and unsettled.”

Peroni said the market is in an “incremental expansion of its trading range, not the beginning of a major new ‘up-leg’ for the Dow.” He said the Dow could move as high as 2,125 or 2,150 but was vulnerable to a drop as low as 1,810 or 1,830.

Takeover news and rumors continued at their recent frenetic pace.

Firestone Tire & Rubber jumped 15 to 77 3/4 in active trading. The company agreed Thursday to be acquired by Bridgestone of Japan for $80 a share, in a deal that topped a previous $58-a-share bid by Pirelli Group of Italy.

Roper Corp. climbed 5 3/4 to 53. Whirlpool Corp. raised its offer for Roper to $50 a share, surpassing a $45-a-share bid by General Electric.

Grumman, which has been moving up lately on unconfirmed takeover rumors, rose 1 7/8 to 25.

Sabine Corp. gained 1 3/4 to 20 1/2. The company, opposing a $20-a-share offer from Presidio Oil, said it was holding preliminary talks with another party.

Pillsbury dropped 2 3/8 to 43. The company reported a $107.8-million loss for the quarter ended Feb. 28 and said its Godfather’s Pizza restaurant chain might be sold.

Large blocks of 10,000 or more shares traded on the NYSE totaled 4,393, compared to 4,137 on Thursday.

The Wilshire index of 5,000 equities closed at 2,681.754, up 0.290 from the preceding trading day.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 274.91 million shares.

Standard & Poor’s index of 400 industrials dropped 0.14 to 314.64, and S&P;’s 500-stock composite index was down 0.10 at 271.12.

The NASDAQ composite index for the over-the-counter market rose 0.88 to 381.58. At the American Stock Exchange, the market value index closed at 299.11, up 0.12.

Share prices rallied in London and Tokyo Friday as the dollar’s gains brightened the economic outlook for U.S. trading partners.

In London, the Financial Times 100-share index closed 27.4 points higher at 1,855.5 as investors cheered the dollar’s rise and the end of the pound’s two-week surge, which had threatened Britain’s exporting industries.

In Japan, however, share prices rose only modestly after central bank governor Satoshi Sumita cautioned that the stock market was rising too fast.

“Sumita’s comments took the steam out of the market,” said broker Robert Karr of New Japan Securities.

The Nikkei index rose 93.97 points to 25,966.26, after briefly topping 26,000 earlier in the day for the first time since Oct. 16. Dealers said the market was encouraged by the lower-than-expected U.S. trade deficit for January. The 225-share index climbed 167.86 points Thursday.