Stock Prices End Higher in Wide-Swinging Session; Dow Index Up 5.69

Stock prices posted a modest advance Friday in a volatile session marked by uncertainty over whether inflation is posing a serious threat to the economy’s health.

The Dow Jones industrial index finished up 5.69 at 2,068.81 after zigzagging between a 20-point loss and a 20-point gain. That left the index with a net increase for the week of 14.22 points.

Advancing issues outnumbered declines by about 7 to 5 in nationwide trading of New York Stock Exchange-listed stocks. Big Board volume came to 141.54 million shares, down from 149.38 million in the previous session.

Before the market opened, the Labor Department reported that the producer price of finished goods rose 0.6% in August. Excluding the volatile food and energy categories, wholesale prices rose a moderate 0.3% in August, half the increase of July.

But the sting was taken out of the report after U.S. oil prices fell sharply on news that the Organization of Petroleum Exporting Countries had not yet decided to call a special meeting to discuss the weak market. Speculation that a meeting was about to be called had supported oil prices Thursday and early Friday.

Larry Wachtel, a market analyst at Prudential-Bache Securities Inc., said the inflation figures had little effect on trading, as Wall Street had expected a 0.5% overall increase in wholesale prices.

Wachtel said many traders were reluctant to take major positions in advance of what will be a four-day weekend for market participants who will be observing the Jewish New Year on Monday and Tuesday.

But with interest rates heading lower in the credit markets as the session progressed, a brief flurry of buy orders came into the stock market at mid-afternoon.

Technology issues were the leaders of the day, providing underlying support for the market’s advance. “Techs were the major story,” said Bear, Stearns & Co. analyst Lewis Smith.

“If investors didn’t like the market, they wouldn’t be going into the techs with such enthusiasm,” said MKI Securities Corp. analyst Charles Jensen. “That shows there’s enough bullish sentiment to search out groups within the market.”

“When the (tech) group didn’t back down with the Dow down 15, that was a sign to traders to get back in,” Smith added.

The most actively traded stock on the NYSE was International Business Machines Corp., which rose 2 to 114 3/8, with almost 2 million shares traded.

Other technology stocks that made strong comebacks were Digital Equipment Corp., the biggest technology gainer, up 2 3/8 to 94 3/4, Honeywell Inc., up 2 to 61 3/4, Compaq Computer, ahead 2 1/8 to 53 3/4 and Cray Research Inc., up 2 1/8 to 80 1/8.

Polaroid was a big gainer, rising 1 7/8 to 41 3/4 as Shamrock Holdings began a $42-a-share hostile tender offer for the company.

Inco Ltd. fell 1 5/8 to 25 5/8. Analysts cited a recent drop in nickel prices.

Lotus Development dropped 3/4 to 17 among the most active issues in the over-the-counter market. The company reported “a little softness” in sales for the third quarter, and said its revenue for the period could possibly show a decline from the second quarter.

The Wilshire index of 5,000 equities closed at 2,657.120, up 7.831.

The NYSE’s composite index of all its listed common stocks gained 0.38 to 150.84. Standard & Poor’s industrial index rose 1.30 to 305.97, and S&P;’s 500-stock composite index was up 0.96 at 266.84.

The NASDAQ composite index for the over-the-counter market climbed 1.87 to 381.60. At the American Stock Exchange, the market-value index closed at 297.45, up 1.83.

In Tokyo, share prices closed lower Friday after an early rally died as investors took profits and kept to the sidelines ahead of the weekend and the release of a report on the U.S. producer price index. The Nikkei 225-share index lost 93.01, to 27,647.10.

Prices on the London Stock Exchange fell slightly after a choppy day of trading.

Stocks plummeted more than 22 points after trading began, mounted a midday rally, and then fell back again late in the afternoon.

At the close, the Financial Times 100-stock index was off 1.4 at 1,738.4.