Dow Index Closes Its Best Week Ever With 18.85 Gain
Stocks rallied again Friday to conclude the Dow industrials’ best week ever as investors cheered a sharp drop in money market interest rates and fresh evidence that the economy is not overheating.
The Dow Jones industrial average closed up 18.85 points at 2,071.30--bringing the week’s points gain to a record 114.86, or 5.8%. That surpassed the previous record weekly point rise of 108.26 set last Dec. 14-18, though it fell well short of some past weekly percentage increases.
Advancing issues outnumbered declines by more than 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks on volume of 189.60 million shares, which was down from the 193.54 million traded Thursday.
“We had a fill-in day yesterday,” said Ralph Bloch, chief technical analyst at Raymond James & Associates, referring to the 11.56-point fall on the Dow on Thursday. “There was some profit taking because there’s still some skepticism out there.”
Investors are wary of inflation, traders said, and they are closely watching the indicators, the rapidly rising gold stocks and the Commodity Research Bureau index, which was up 2.02 at 255.10 on Friday.
But in general, stock analysts sounded more positive than they have in a long time. “We’ve had a very indicative week and it’s ended up on a positive note,” one analyst said.
Another said the stock exchange next week “has the potential to hit a burst of enthusiasm.”
Before the market opened, the Labor Department reported that non-farm payroll employment increased by 209,000 in May, while the overall unemployment rate rose to 5.5% from 5.4% the month before.
Analysts said those figures showed a little less strength in the economy than had been anticipated, and thus served to dampen worries about inflation somewhat.
Blue Chip Standouts
Interest rates fell in the credit markets, putting yields on long-term government bonds in the neighborhood of 9.05% to 9.1%.
After weathering mild bouts of selling late in the morning and at mid-afternoon, stocks came on strong near the close.
Gainers among the blue chips included Alcoa, up 1 at 49; International Paper, up 1 at 43; Du Pont, up 1/2 at 85 3/8; Philip Morris, up 1 3/8 at 86 3/4, and International Business Machines, up 5/8 at 113.
Brokers said basic-industry stocks in businesses such as chemicals and paper attracted investors who reasoned that moderate growth in the economy would allow industrial America to continue posting robust earnings gains.
Texaco lost 5/8 to 50. The oil company dismissed Carl C. Icahn’s financing plan for his proposed $14.5-billion takeover. Icahn said he would need to borrow only $8.86 billion of the extra $12.4 billion he is offering for the shares he does not already own.
Abbott Laboratories fell 1 7/8 to 45 1/8 and Bristol-Meyers lost 1 1/2 to 41, both in active trading, on reports that Nestle SA was preparing to introduce a product to compete with Abbott’s and Bristol’s infant formulas.
Biocraft Laboratories dropped 1 1/8 to 14 1/8. The company reported earnings for its fiscal fourth quarter ended March 31 of 13 cents a share, down from 19 cents in the comparable period a year earlier.
In foreign trading, the Nikkei 225-share average closed at 27,821.54 points, down 47.82 points, on the Tokyo Stock Exchange on Friday.
In London, share prices rose as the opening of a new trading account on London’s Stock Exchange prompted some fresh buying.
The Financial Times 100-share index closed 8.9 points, or 0.5%, higher at 1,819.2.
