FINANCIAL MARKETS : Stocks : Dow Heads Into Long Weekend With 11.18 Gain
The stock market closed higher with help from a stronger bond market Friday in light pre-holiday trading, overcoming profit taking that has dogged the market since the Dow Jones industrial index hit 2,500 earlier in the week.
Activity tapered off through the session as many traders got an early start on the long Memorial Day weekend. The markets will be closed on Monday.
The Dow industrial index rose 11.18 to 2,493.77, cutting its loss for the week to 7.33 points.
Advancing issues outnumbered declines by about 5 to 2 in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board came to 143.12 million shares, down from 154.47 million in the previous session.
Interest rates fell in the credit markets. Prices of long-term government bonds rose more than $5 for each $1,000 in face value, reducing their yields to the 8.6% to 8.65% range.
Analysts said stocks benefited from expectations that the recent downturn in rates might have further to go, with encouragement from the Federal Reserve.
The economy has showed signs of slowing lately, as Fed policy makers have intended. Furthermore, some observers think the central bank might want to ease credit in order to slow the recent sharp rise of the dollar in foreign exchange.
Sea Containers Ltd. jumped 9 5/8 to 57 5/8. The European companies Tiphook PLC and Stena AB made a $50-a-share offer for Sea Containers, and traders quickly bid up the price in anticipation of a possible higher offer.
Avon Products rose 1 5/8 to 36 3/4. An official of Mary Kay Corp. said he and a group of investors remain interested in acquiring Avon, which recently warded off a hostile takeover bid by Amway Corp.
Rorer Group, which said it was amenable to a merger if the right partner could be found, climbed 3 3/8 to 41 1/4.
National Education fell 2 3/8 to 21 1/8. The company said it may post flat or lower earnings for the second quarter.
Texaco led the NYSE active list, down 1 1/8 at 55 on turnover of about 5.5 million shares. Brokers said much of the activity represented maneuvering by traders in advance of a $4-a-share special dividend to be paid to holders of record June 5.
Stocks closed broadly higher on the Tokyo Stock Exchange as a weaker U.S. dollar pushed stocks to a record high. Trading was slow. The 225-share Nikkei index, jumped 186.23 points to close at a record high of 34,191.62.
On the London Stock Exchange, share prices edged higher sluggish trading. At the close, the Financial Times 100-share index rose 3.7 points to 2,140.3.
Credit
Bond prices advanced, recovering from an early decline on the strength of the dollar and signs that inflation might be moderating.
The Treasury’s key 30-year bond rose 11/16 point, or nearly $7 for every $1,000 in face value. Its yield, which moves in the opposite direction from price, declined to 8.61% from 8.67% late Thursday.
Trading was described as thin in advance of the Memorial Day holiday weekend, and the markets closed earlier than usual.
Prices began the day on the down side after the government reported consumer spending shot up 1.1% in April, the biggest advance in nearly a year. The spending data fueled the market’s fears of inflation, which erodes the value of fixed-income investments such as bonds.
But bond prices later recovered as traders examined personal income figures released by the Commerce Department, said Maury Harris, chief economist with Paine Webber Inc.
The better-than-expected report gave traders hope that the inflation rate might be slowing.
The dollar was mixed against other currencies, but showed signs of defying central banks’ attempts to drive it lower. Its resilience carried over to the bond market, analysts said.
The federal funds rate, the interest on overnight loans between banks, was quoted at 9.688%, down from 9.813% late Thursday.
Commodities
Grain and soybean futures prices closed mostly lower in sluggish trading on the Chicago Board of Trade, as activity was muted by uncertainty over the weather and by the impending Memorial Day weekend.
On other markets, energy futures were higher, precious metals were lower and livestock and meat prices were down.
Soybean futures were mixed, with the July contract higher on reports of heavy trading in Europe of soybean oil and soybean meal.
Uncertainty over the weather put a damper on most of the market. National Weather Service forecasts for next week call for average or above-average rain for major crop-producing states.
Corn futures were boosted slightly by heavy rains in Ohio and Indiana. The rain could further delay the planting of corn crops in those states.
Wheat futures were lower, despite an upswing in exports and reports the Soviets were in the market for spring and red winter wheat.
