Dow Off 7 in 2nd-Lightest Trading of ’88

Stock prices closed lower Friday in the second-lightest trading day of the year, pushed down by investor fears of further rises in interest rates after government employment figures pointed to an expanding economy.

The Dow Jones index of 30 industrials closed off 7.47 points at 2,119.13, down 9.60 for the week, with declining issues outnumbering advances by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks

On the Big Board, 113.40 million shares were traded, down from 157.24 million Thursday and the smallest total since a 102.64 million-share day on May 23.

“There was basically lackluster, sideways action here today. Not much went on,” said William King, trader for Nikko Securities Co.

Before the market opened, the Labor Department reported that the unemployment rate edged up to 5.4% last month from the 14-year low of 5.3% it reached in June.

But the monthly statistics that Wall Street watches more closely, on non-farm payroll employment, told a different story.

Payrolls increased 283,000 in July, and the figure for June was revised upward to show a gain of 532,000.

Interest Rates Advance

Along with robust economic growth, analysts said, that raised the prospect of increased inflationary pressures, and gave the Federal Reserve fresh cause to consider tightening credit further.

Interest rates climbed in the credit markets after the news was reported. Prices of long-term government bonds, which move in the opposite direction from interest rates, posted losses of about $7.50 for each $1,000 in face value, putting their yields in the 9.1% to 9.03% range.

Traders and market analysts expressed surprise that the stock market did not react more severely to the higher interest rates. “The key to today is that if the market was really vulnerable, it would have had a sharp decline,” said Donald Hays of Wheat First Securities.

“The market received fairly bad news on interest rates and it almost didn’t sell off at all.”

Losers among the blue chips included Ford Motor, down 3/8 at 53 3/4; General Electric, down at 41 3/4; International Business Machines, down 3/8 at 123 7/8, and American Express, down 3/4 at 28 7/8.

On the plus side, General Motors gained 1/8 to 78 1/8 and American Telephone & Telegraph added to 26 1/2.

Russ Berrie & Co. tumbled 2 7/8 to 18 3/4. The company reported second-quarter earnings of 4 cents a share, down from 27 cents in the comparable period a year ago.

Indicators Decline

Leading Japanese issues were notably weak. Honda Motor fell 6 to 165 3/8, Matsushita dropped 6 to 212 1/2, TDK gave up 3 to 76 and Kyocera lost 2 3/4 to 88.

Cullum Cos. rose 1/2 to 22 5/8 in the over-the-counter market. The company is the subject of a $22.50-a-share buyout proposal by a group including top executives.

The Wilshire index of 5,000 equities closed at 2,698.442, down 7.857.

The NYSE’s composite index of all its listed common stocks dropped 0.46 to 153.09.

Standard & Poor’s industrial index fell 1.00 to 312.21, and S&P;’s 500-stock composite index was down 0.78 at 271.15.

The NASDAQ composite index for the over-the-counter market lost 1.15 to 387.71. At the American Stock Exchange, the market-value index closed at 304.95, down 0.38.

On the Tokyo stock exchange, share prices closed at record-high levels Friday for the second time in a week although trading volume remained small.

The Nikkei 225-share index rose 130.72 to a record 28,423.38, surpassing the previous record close of 28,366.33 set Tuesday.

Share prices also finished higher on the London Stock Exchange, but well below the day’s peak.

The Financial Times 100-share index rose 6.2 to 1,875.9.