Dow Falls Back After Passing Post-Crash High, Closes Up 8.36
Wall Street’s key Dow index recaptured the 2,100 level Friday but only briefly managed to reach above its post-crash closing high as a retreat in bond prices led to a late spell of profit taking in stocks.
The Dow Jones index of 30 blue chips rose 8.36 to 2,101.71, finishing the week with a net gain of 30.41 points.
The average failed, however, to maintain a midsession gain of more than 21 points that carried it past the post-crash closing peak of 2,110.08 it reached on April 12.
Advancing issues outnumbered declines by about 3 to 2 in nationwide trading of the New York Stock Exchange.
“The market still has trouble above that 2,100 level,” said Larry Wachtel, market watcher at Prudential-Bache Securities Inc. “We got up and then faded as the bonds showed a downtick.
“It was a good day, but it’s the second straight day where the market has challenged the closing high, then faded. But it shows we’ve come a long way,” Wachtel said.
Bonds rose early after the government reported a 0.5% rise in producer prices for May, up from a 0.4% rise in April. However, the figure was within expectations and, although higher, was not so steep as to threaten spiraling inflation.
The bond market has had a strong influence on stock prices in recent weeks because of fears that a strong economy will stimulate more inflation and in turn persuade the Federal Reserve to raise interest rates.
The key 30-year bond ended up 3/32 at 100 27/32, putting its yield at 9.04% against Thursday’s 9.05% close.
Feeling of Relief
Although the producer price index figure tended to confirm expectations that inflationary pressures have increased slightly, it also came in about where analysts had expected it to be.
Brokers said there was quite possibly a feeling of relief among investors that the news wasn’t worse.
Gainers among the blue chips included Exxon, up 1/2 at 45 7/8; Ford Motor, up 1/8 at 52; International Business Machines, up 5/8 at 116; International Paper, up 1/2 at 46 3/8, and Eastman Kodak, up 1/8 at 44 1/2.
Payless Cashways rose 1 1/8 to 25 5/8. Faced with takeover overtures from a group led by investor Asher B. Edelman, the company said its top executives are considering a leveraged buyout.
AGS Computers climbed 1 3/4 to 27 1/8 on word of an agreement for Nynex to acquire AGS’ professional services and software products businesses. In the deal, AGS holders are to get $21 a share in cash and shares of the company’s Microamerica Inc. subsidiary.
Precious metals stocks were weak as the price of gold fell $8 an ounce to $449.10 on the Commodity Exchange in New York. Amax Gold dropped 2 to 24, Homestake Mining fell 5/8 to 15 3/8, ASA Ltd. lost 1 1/8 to 44 1/2 and FMC Gold eased 1/2 to 11 1/8.
Volume on the floor of the Big Board came to 155.71 million shares, down from 235.16 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 181.58 million shares.
The Wilshire index of 5,000 equities closed at 2,697.982, up 11.251.
The NYSE’s composite index of all its listed common stocks gained 0.53 to 152.89.
Standard & Poor’s industrial index rose 1.15 to 313.62, and S&P;’s 500-stock composite index was up 1.06 at 271.26.
The NASDAQ composite index for the over-the-counter market added 1.65 to 386.25. At the American Stock Exchange, the market-value index closed at 309.33, up 8.45.
In foreign trading, The Nikkei 225-share average closed at 27,920.36, down 151.66 points, on the Tokyo Stock Exchange Friday.
However, share prices rose on the London Stock Exchange for a second straight day, led higher late in the session by a strong start on Wall Street.
The Financial Times-Stock Exchange 100-share index finished 8.3 points higher at 1,849.8.
