Dow Gains 3.36 on Durable-Goods Report

Market Overview

* Stocks closed in the plus column Friday, with the Nasdaq index setting another record high, buoyed by an upbeat report on orders for durable goods.

* After meandering through most of the day, long-term interest rates were pushed lower by a late flurry of buying.

Stocks

The market managed to recover from an early selloff on news of new tensions in politically troubled Russia.

The Dow Jones industrial average followed a zigzag course before ending the day up 3.36 at 3,543.11. But the blue-chip gauge lost 70.14 points in the week.

Small-company shares generally fared better than Big Board issues, and the Nasdaq composite index reached a record close for a second day running, ending up 2.39 points at 754.65.

Wall Street gave a tentative welcome to a government report that furnished evidence that the manufacturing sector’s recovery might be gathering momentum. Equity investors also took heart from the bond market’s reaction to the unexpectedly upbeat economic news.

The Commerce Department reported that August durable-goods orders increased 2%. Excluding the volatile transportation sector, however, orders rose only 0.3%.

In the broader market, advancing issues outnumbered declines by fewer than 50 issues in the late tally on the New York Stock Exchange. Big Board volume amounted to 248.27 million, compared to 275.35 million Thursday.

Among the market highlights:

* The Big Three auto makers were also heavily traded on the NYSE. Chrysler rose 5/8 to 48, Ford was unchanged at 56 7/8 and General Motors also ended unchanged at 46 1/8.

* Deere jumped 2 1/2 to 70 1/8 after a brokerage raised its earnings forecast for the farm implements maker.

* Among cyclicals, Caterpillar rose 1 1/8 to 78 1/8 and Whirlpool rose 7/8 to 60 5/8.

* HMO stocks, seen as winners in the Clinton Administration’s health care package, lifted the Nasdaq index. U.S. Healthcare rose 2 7/8 to 52 and Pacificare added 2 1/4 to 34 3/4.

Stocks abroad were mixed. Frankfurt’s 30-share DAX average ended 30.65 points lower at 1,885.86. In Tokyo, with the 225-share Nikkei average ending up 132.91 points at 20,307.53. London’s Financial Times 100-share average closed up 3.9 at 3,005.2.

Other Markets

Bond prices rose and interest rates receded even though the reading on new orders for durable goods came in higher than forecast. Bond traders dislike signs of accelerating economic growth because of the inflationary pressures it typically breeds.

Nonetheless, the 30-year Treasury issue sported a gain of nearly 1/2 point in late trading, driving its yield to 6.03%, down from 6.06% late Thursday.

The late buying resulted from a Federal Reserve Bank report that its policy-setting board decided last month to move away from a bias toward higher interest rates and adopt a more neutral stance.

Many economists have been expecting the Fed to hold interest rates steady until early next year.

The 30-year bond’s price rose 17/32 point, or $5.31 per $1,000 in face value. Prices and yields move in opposite directions.

The federal funds rate, the interest on overnight loans between banks, was 3%, down from 3.063% on Thursday.

Meanwhile, on the New York Commodity Exchange, gold for current delivery fell to $357.40 an ounce, down 60 cents from Thursday. Silver for current delivery fell 4.2 cents to close at $4.116 an ounce.

On the New York Mercantile Exchange, November light, sweet crude oil fell 6 cents to $17.57 a barrel.

In currency trading, the dollar lost ground with the easing of tensions in the markets about upheaval in Russia.

The dollar closed in New York at 1.639 German marks and 105.85 Japanese yen, down from the previous session’s 1.644 marks and 105.94 yen.