Bond Market Weathers Sunny Jobless Report : Market Overview
Long-term Treasury bond yields fell Friday despite strong reports on November employment and leading economic indicators.
* Most U.S. stock indexes lurched ahead in moderate trading, led by smaller stocks. Overseas markets were strong.
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The bond market shrugged off new signs of economic strength, suggesting to some traders that the recent surge in interest rates is topping out.
The 30-year Treasury bond yield closed at 6.23%, down from 6.28% on Thursday, even though the government reported the biggest one-month decline in unemployment in a decade.
Shorter-term yields were largely unchanged for the day.
In addition to the November employment report, the bond market had to cope with news that the government’s index of leading economic indicators surged 0.5% in October, the third straight jump.
In recent weeks, interest rates have risen with each new indication that the economy is picking up steam. The 30-year T-bond yield, at 6% near the end of October, surged as high as 6.39% on Nov. 22, on worries that stronger growth will lead to higher inflation.
But Friday’s calm hinted that bond sellers have exhausted themselves and that market interest rates may already reflect a more robust economy.
Analysts said investors may at least for now be betting that the economy’s recovery can progress without higher inflation. That new optimism may be based partly on the recent plunge in oil prices, which could significantly suppress inflation in the near term.
Other Markets
Stocks gained, helped by the positive economic news.
The Dow industrials added 1.96 points to 3,704.07, hovering just under the all-time high of 3,710.77 reached Nov. 16. The Dow’s gain for the week: 20.12 points.
The broader market was stronger. Winners topped losers 12 to 8 on the New York Stock Exchange and 12 to 11 on Nasdaq.
Technology and telecom issues continued to rebound sharply from their November selloff. Analysts said the economy’s strength was encouraging investors to bargain hunt in downtrodden stock groups.
The Nasdaq composite index, heavy with tech issues, shot up 5.49 points Friday to 772.22. It rose 17.35 points, or 2.3%, for the week.
Foreign market gains helped sentiment on Wall Street.
In Mexico City, the Bolsa index surged 53.31 points to a record 2,324.09, as optimism about the North American Free Trade Agreement continued to draw buyers to Mexican stocks.
Buyers also swarmed again overseas. In Frankfurt, the DAX index rose 10.08 points to a record 2,120.61. London’s FTSE-100 index also hit a record, up 10.3 points to 3,234.2, as did Singapore’s Straits Times index, up 20.25 points to 2,151.50.
Among U.S. market highlights:
* Strong tech and telecom issues included Microsoft, up 2 7/8 to 85 3/4; Cabletron Systems, up 3 3/8 to 114 1/8; Lotus, up 4 3/8 to 51 3/8; 3Com, up 7 1/8 to 42 7/8, and People’s Choice TV, up 3 1/2 to 32 1/4.
But Broderbund Software fell 5 1/2 to 41 3/4 after the entertainment software maker said it expects disappointing quarterly results.
* Some industrial stocks responded to the good economic news. Stanley Works added 3/4 to 41 1/4, Giddings & Lewis surged 1 1/8 to 26, GM jumped 1 1/2 to 55 and Monsanto leaped 2 3/4 to 71 3/4.
* Publishing issues also gained. Times Mirror, parent of The Times, rose 1 3/4 to 33 1/4; Gannett gained 1 1/8 to 57 5/8, and Knight-Ridder added 1 7/8 to 60 3/4.
* News of a major new casino project in Windsor, Canada, pumped up the three gaming companies that will develop it: Caesars World jumped 3 3/8 to 52 3/4, Hilton soared 3 3/4 to 50 7/8 and Circus Circus added 1 1/2 to 37 7/8.
Elsewhere:
* Oil prices inched up from Thursday’s five-year low. Light crude for January added 2 cents to $14.97 a barrel in New York.
* Gold futures gained $3 to $376.80 an ounce; silver rocketed 19.8 cents to $4.81.
Market Roundup, D4
