FINANCIAL MARKETS : STOCKS : Dow Rises 20.90 to 2,753.20, Ending Year Up 27%
The stock market closed out a decade of dramatic gains with a broad advance Friday as traders finished up their year-end shuffle on Wall Street.
The Dow Jones index of 30 industrials rose 20.90 to 2,753.20, extending its gain for the week to 41.81 points.
In 1989, the index climbed 584.63 points, or 26.96%, capping off a rise for the decade of 1,914.46 points, or 228.25%.
Advancing issues outnumbered declines by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,083 up, 484 down and 425 unchanged.
Big Board volume was 145.94 million shares, up from 128.03 million in the previous session. Analysts said traders were buying cautiously in hopes that the market could get off to a strong start for 1990 next week.
Much anticipation has focused of late on the so-called January effect, a historical tendency for the market in general and small stocks in particular to do well in the early stages of a year.
But brokers also cited persistent worries about the outlook for the economy over the next several months.
The Commerce Department reported Friday morning that the index of leading economic indicators rose 0.1% in November after posting a revised 0.3% decline the month before.
Among actively traded blue chips, Philip Morris rose 1/2 to 41 5/8; International Business Machines held steady at 94 1/8; American Telephone & Telegraph slipped 1/8 to 45 1/2, and American Express was up 1 1/8 at 34 7/8.
The Tokyo Stock Exchange struggled on Friday to manage a fitting finale to the year-end rally on the last day of trade for 1989 as window-dressing brought prices back up after they dipped before the close, brokers said. The key 225-share Nikkei index crawled up 38.93 points to 38,915.87, its fourth-straight record close.
In London, stocks ended sharply higher, close to the year’s peak and within sight of the 100-share Financial Times-Stock Exchange index’s all-time high. The Financial Times’ 100 ended 23.9 points up at 2,422.7, just short of the year’s closing high of 2426.0 on Sept. 5 and within striking distance of the record close of 2,443.4 on July 16, 1987. Its gain since the start of the year was around 36%.
CREDIT Prices of Bonds Fall Moderately Bond prices fell moderately Friday after a survey of Chicago purchasing executives indicated strength in the manufacturing sector of the economy.
The Treasury’s 30-year bond fell 5/32 point, or about $1.56 per $1,000 face amount. Its yield edged up to 7.97% from 7.96% late Thursday.
Analysts said an initial report that Chicago purchasing managers were reporting a slowdown in the economy gave the market a lift, but when the report was corrected, showing strength among industrial firms, bond prices turned downward.
Traders believe that the Federal Reserve is more likely to relax credit and allow interest rates to fall if the economy is slowing. The report of a pickup in the economy led them to believe that the Fed would not push rates downward.
The federal funds rate, often an important reflection of the Fed’s credit policy, fell dramatically as the central bank added funds to the system to help banks meet their year-end needs.
The rate, which closed at 9 3/4% on Thursday, fell to 7 1/2%.
Analysts said the extra reserves were needed by banks for the long weekend.
CURRENCY Dollar Closes Higher on World Markets The dollar closed higher on world currency markets Friday in light dealings ahead of the New Year’s holiday.
Gold prices rose in European and domestic trading after falling in the Far East. On the Commodity Exchange in New York, gold bullion for current delivery settled at $402.50 an ounce, up $3.90 from Thursday. Republic National Bank in New York quoted a late bid for gold at $402.50 an ounce, up $3.50.
In Tokyo, the dollar rose to a closing 143.40 Japanese yen, from 142.15 yen at Thursday’s close. Later in London, it rose to 143.80 yen. In New York, the dollar ended the year at 143.85 yen, up from 143.55 on Thursday. The dollar ended 1988 at 122.00 yen.
In London, the British pound fell to $1.6115, from $1.6137 late Thursday. In New York, one British pound cost $1.6105, more expensive than Thursday’s $1.6045.
COMMODITIES Heating-Oil Futures Prices at 6-Year High
Heating-oil futures prices rebounded to close at a six-year high, and gasoline futures climbed sharply on indications that the push to produce more heating oil is taking a toll on gasoline supplies.
Orange juice futures also rose dramatically as temperatures in Florida continued to warm, threatening further damage to oranges.
On other commodity markets, precious metals advanced, grains and soybeans were mixed, and livestock and meat futures were mixed.
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