FINANCIAL MARKETS : Stocks Break From Record-Setting, End Mixed
Market Overview
* Weakness in the bond market Friday gave Wall Street an excuse to take a break from its record-setting ascent, and stocks closed mixed. The Dow Jones industrials lost 7.55 points to 3,640.63.
* The bond rally stalled as some traders sold securities to capitalize on recent record high prices. The yield on the Treasury’s benchmark 30-year bond jumped to 6.14% from 6.08% on Thursday.
* The dollar lost ground against the mark and the yen.
Stocks
Investors eager to cash in some profits from the market’s climb to new highs over the last three weeks seized the opportunity to sell as interest rates backed up.
But the sellers failed to spark a rout. The Dow, while down for the day, rallied back from a loss of 20 points early on. And losing stocks edged winners by just 985 to 899 on the Big Board, on very slow volume of 196 million shares.
“It wasn’t such a bearish day. It was a small step back after many big strides forward,” said Steven Resnick, senior investment strategist at Cowen & Co.
The Dow’s gain for the week was 25.15 points.
Meanwhile, smaller stocks gained even as blue-chips fell Friday, helped by a rebound in technology issues. The NASDAQ composite index of mostly smaller stocks rose 2.68 points for the day to 734.07. The index gained 3.11 points for the week.
Among Friday’s highlights:
* The market saw another buying frenzy in communications, cable TV and Hollywood stocks on reports that AT&T; is exploring the creation of a multimedia network.
AT&T; surged 2 to 62 3/4, cable giant Tele-Communications rose 1 1/4 to 25 3/4, Cablevision Systems leaped 1 1/4 to 45 1/2 and Comcast gained 1 to 31 1/8. Among cable equipment suppliers, General Instrument soared 1 5/8 to 50 3/4 and Scientific Atlanta zoomed 1 3/4 to 37.
Among studio companies, Disney rose 7/8 to 40 1/4, Paramount Communications gained 1 1/2 to 55 7/8 and Time Warner rose 7/8 to 41 1/8.
* Elsewhere, Turner Broadcasting Class B rose 1 1/4 to 25 1/4 amid published reports saying it is close to signing agreements with at least two major studios to add about 1,500 films to its expanding library.
* On the downside, hospital giant National Medical Enterprises plummeted 3 3/8 to 7 3/4 in the wake of a massive federal probe into allegedly false or improper claims by NME for reimbursement under Medicare or Medicaid.
Other companies were also notified they would receive subpoenas about such claims. Among them, Allied Clinical lost 1 1/2 to 17 1/4, Nichols Institute Class A eased 5/8 to 5 3/8, and Unilab fell 1 1/4 to 6.
* Shares of Glendale Federal closed at 9 1/8. The new stock, reflecting the Southland thrift’s recapitalization, replaces old stock that traded for the last time Thursday, at 1/2.
* Also among Southland issues, Western Waste soared 2 1/2 to 15 3/4. The garbage hauler said it is in “very preliminary” discussions with other companies about a merger or other combination.
Overseas, Tokyo stocks jumped, with the Nikkei index up 199.92 points to 20,791.68. Shares gained in Frankfurt and rose to record levels for a second straight day in Paris.
In London, stocks also hit new highs. The FTSE-100 index closed above the 3,100 mark for the first time, finishing at 3,100.6, up 21.4 points, or 0.7%.
Also, Toronto stocks surged to a record high on strong gold and forestry stocks, with the TSE-300 composite index gaining 17.80 points to 4,133.40.
Other Markets
Bond yields rose after three straight record-setting sessions this week attributed to a climate of low inflation and slow economic growth--both of which favor fixed-income securities.
Those fundamentals didn’t change Friday. The yield rise was attributed to selling to take advantage of the record levels, as well as caution ahead of the release of government employment and gross domestic product statistics next week.
John Canavan, an analyst at Stone & McCarthy Research Associates Inc., said traders were reluctant to maintain large positions in government securities ahead of the government news scheduled for release next week.
Traders are worried about missteps, he said, both if they abandon the rally and see the price rise further or stick with it and watch it end.
The dollar posted mild losses in slow trading, weakened by Germany’s refusal to cut interest rates this week and Japan’s interventions to support the yen.
The dollar fell to 1.6640 marks in New York from 1.6658 marks at Thursday’s close. The dollar was quoted in late trading at 103.80 yen in New York, below the 104.35 yen level of Thursday.
Gold rose on New York’s Commodity Exchange, where bullion for the most active December contract ended at $372.10 an ounce, up $1.30.
Crude oil prices rose sharply Friday after oil workers at a Nigerian export terminal walked off the job to protest an interim government installed this week.
The disruption, ahead of a general strike called for today in one of the world’s Top 10 oil-producing countries, sent crude oil prices up 44 cents a barrel Friday on the New York Mercantile Exchange. Light, sweet crude for delivery in October settled at $18.80 per barrel.
Market Roundup, D4
