3.75-Gain Pushes Dow Ahead 25.72 for Week; Dollar Sharply Higher
The stock market rang up its third-straight gain Friday, extending the rally that has carried the Dow Jones industrial index to its highest levels since the crash of 1987.
The Dow Jones average of 30 industrials rose 3.75 to 2,194.29, finishing the week with a net gain of 25.72 points.
Advancing issues outnumbered declines by about 9 to 5 in New York Stock Exchange trading.
Volume on the floor of the Big Board came to 161.33 million shares, down from 174.04 million in the previous session.
The dollar breached the key 1.80-mark level Friday, gaining nearly two pfennigs against the West German currency in a strong rally.
The blue chip index has added nearly 50 points in the last three sessions, setting a post-crash high Thursday as well, as a sharp rise in the dollar pushed Wall Street’s interest-rate worries into the background.
The Dow industrials, which briefly broke through 2,200 points Thursday, stayed above that level for much of Friday, but then fell back in the last hour as traders took profits.
Before the market opened the Labor Department reported that the civilian unemployment rate dropped to 5.3% in December from 5.4% the month before. Accompanying data showed a 279,000 increase in nonfarm payroll employment.
The report signalled persistent strength in the economy, and did nothing to relieve expectations on Wall Street that the Federal Reserve might tighten credit further to keep inflation from reviving.
On the Tokyo Stock Exchange, the Nikkei 225-share average closed Friday at 30,209.54 points, up 25.75 points.
Share prices on the London Stock Exchange also rose, boosted by more speculative buying and another jump in the dollar. The Financial Times 100-share index gained 11.8 points, to close at 1811.3.
The dollar rose sharply as traders interpreted comments by a West German official as being bullish for the U.S. currency.
Gold prices fell. In New York trading, Republic National Bank quoted a bid of $406.25 for an ounce of gold as of 4 p.m. EST, down from $408.25 late Thursday. Gold also declined on overseas markets.
The dollar surged after Helmut Schlesinger, vice president of the Bundesbank, said the West German central bank had not intervened recently to influence exchange rates.
Dealers said Schlesinger’s remarks were taken to mean that the central bank did not intend to defend certain exchange levels, which would allow the dollar to gain against the West German mark.
However, the Bundesbank and the Federal Reserve did enter the market Friday to stem the dollar’s rise against the mark, said Dan Holland, an assistant vice president at Discount Corp. But the dollar still put in a strong performance.
The British pound lost more than 4.5 cents against the dollar in three trading sessions in London, where one pound cost $1.7797 late Friday, cheaper for buyers than late Thursday’s $1.7970. Sterling also declined in New York, slipping to $1.7780 from late Thursday’s $1.7940.
Earlier in Tokyo the dollar closed at 125.97 Japanese yen, up from Thursday’s late 124.50. In London late Friday the dollar traded higher at 126.40 yen, and in New York, it rose to 126.725 yen from late Thursday’s 125.975.
Bond prices rose, pushed up by a stronger dollar and the government’s unemployment report.
The Treasury’s closely watched 30-year bond gained 21/32 point, or about $6.50 for every $1,000 in face value. Its yield, which moves in the opposite direction from its price, fell to 9.03% from 9.08% on Thursday.
Corporate issues also were higher. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, advanced 0.93 to 293.68.
The Bond Buyers municipal bond index of 40 long-term bonds was unchanged at 91 6/32 and a yield of 7.78%.
Yields on three-month Treasury bills were 8.55% as the discount rose 1 basis point to 8.27%. Yields on six-month bills were 8.96% as the discount remained unchanged at 8.47%. Yields on one-year bills were 9.17% as the discount fell 2 basis points to 8.50%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 9.625% late Friday, up from 8.994% late Thursday.
Copper futures prices fell sharply on New York’s Commodity Exchange in a selloff linked to profit taking and the dollar’s strength against the British pound.
On other markets, coffee futures also plunged; cotton was sharply higher; energy futures rose; precious metals, livestock, meat, grain and soybean futures were mixed, and stock index futures advanced.
Copper settled 3.4 cents to 7.2 cents lower with the contract for delivery in March at $1.36 a pound. Copper for spot delivery settled at $1.478 a pound.
Analysts said there had been no change in the bullish supply and demand factors that helped boost the price of spot copper to a record $1.6475 a pound on Dec. 8.
Coffee futures finished sharply lower on New York’s Coffee, Sugar & Cocoa Exchange on speculative selling tied to bearish technical market signals, analysts said.
Livestock and meat futures ended narrowly mixed ahead of the Agriculture Department’s quarterly U.S. hogs and pigs report.
In the report, which was released after the close of trading, the USDA estimated the nation’s hog and pig herds at 55.3 million head as of Dec. 1, a 1% increase over 1987’s figure. The number was slightly below most analysts’ pre-report estimates and analysts said they expected pork futures to open higher on Monday.
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