Dow Ends Wild Day With 8.38 Slip : Market Overview

* Stocks closed a wild session with a small loss, as investors appeared uncertain how to react to the July unemployment report. The Dow Jones industrial average slipped 8.38 points to 3,332.18. For the week, it lost 61.60 points.

* Bond yields plummeted as investors plowed back into long-term issues, convinced the economy remains weak and that interest rates will fall further. The 30-year Treasury bond yield slid to 7.39% from 7.44% Thursday.

Stocks

The Dow jumped in early trading as interest rates plunged, following the July unemployment release.

The overall report suggested the economy remains weak. That pleased investors who were expecting some improvement in employment, but not enough to preclude even lower interest rates.

But the Dow’s gain of 30 points at midday evaporated as trading advanced. Traders blamed a late bout of futures-linked selling.

Losers topped winners by about 7 to 6 on the New York Stock Exchange, where volume was 188.35 million shares against 181.39 million Thursday.

The market also continued to be hit by poor earnings reports. Friday’s biggest casualty was high-tech giant Hewlett-Packard, which sank 12 5/8 to 58 7/8 after warning that earnings in the quarter just ended will fall short of analysts’ estimates of $1.12 a share.

The firm said sales have slowed in many key lines. It blamed the sluggish world economy.

Among the market highlights:

* Losses in GM and IBM hurt the Dow again. Both stocks have plunged this week on earnings worries. Friday, IBM fell 1 1/8 to 87 1/8 and GM eased 1/4 to 37. An expected trade of more than five million GM shares was canceled after TV commentator Dan Dorfman disclosed the name of the seller as Alliance Capital.

* Another technology casualty was Storage Technology, which sank 1 5/8 to 33 3/8 in advance of news that its new data-storage product will be delayed by at least one quarter. Trading was halted and didn’t resume.

Among other tech losers, Novell fell 1 7/8 to 48 7/8, Digital Equipment lost 1 3/8 to 37 1/4 and Motorola gave up 1 5/8 to 84 5/8.

* Insurers were a bright spot. Several have reported strong earnings lately. GEICO rose 2 3/4 to 56, Continental Corp. added 1 1/2 to 34 1/8 and General Re rose 1 5/8 to 90 5/8.

* Food stocks, a safe haven in a slow economy, continued to gain. Hershey added 1/4 to 42 7/8, Campbell Soup was up 3/8 to 37 7/8 and Sara Lee rose 1/4 to 54 1/2. Also, Ben & Jerry’s Ice Cream rocketed 3 to 30 1/2. The firm reported second-quarter earnings up 70%.

* Kennedy-Wilson, the Santa Monica-based real estate auction house, went public at 7 a share and closed at 7 3/8 on the NASDAQ.

* Kaiser Steel Resources rose 1 1/4 to 13 3/4 after Thursday’s gain of 3 1/4. Salomon Bros. began coverage of the Rancho Cucamonga firm with a buy rating.

Overseas, London’s Financial Times-100 index sank 27.5 points to 2,350.1 in thin trading. Frankfurt’s DAX index lost 11.65 points to 1,609.50. Tokyo’s Nikkei index fell again, off 408.17 points to 15,518.27.

Credit

The weak July employment report solidified the view that interest rates have nowhere to go but down, sparking a new wave of buying in the bond market.

At its closing yield of 7.39%, the 30-year Treasury bond now has reached the low of last Dec. 31, which had been the lowest since 1986. The bond’s price rose $8.13 per $1,000 for the day.

Beyond the weak gain in employment, traders also were happy to see July data showing no change in hourly earnings or the factory workweek, said Elliott Platt, analyst at DLJ Securities.

“The market is increasingly comfortable with a moderate, low-inflation recovery,” Platt said.

The fed funds rate, the rate on overnight loans between banks, fell to 3.13% from 3.25% Thursday.

Currency

Lower interest rates dragged the dollar down, despite intervention by the Federal Reserve.

The dollar closed in New York at 127.45 Japanese yen, down from 127.65 Thursday. It also fell to 1.468 German marks from 1.477.

The Fed intervened at least three times in the market, buying dollars in an attempt to bolster the sagging currency. But by the second attempt the Fed was fighting a losing battle, traders said.

Lower U.S. interest rates encourage foreign investors to search elsewhere in the world for bonds, which then depresses the dollar.

Commodities

Corn and soybean prices plummeted on estimates of a record-setting corn crop and a near-record soybean harvest this fall.

In Chicago, November soybean futures fell 13.5 cents to $5.29 a bushel. December corn lost 3.75 cents to $2.14 1/2 a bushel.

Elsewhere, August gold on the Comex in New York added $1.30 to $350.30 an ounce, rebounding from recent losses. Silver for September was strong, rising 5.6 cents to $3.96. Traders said silver is poised to rise over the $4 mark soon.

September crude oil lost 20 cents to $21.22 a barrel on the New York Merc, despite continued inflammatory rhetoric between the United States and Iraq.