Reports Bring Dow Record, Lower Yields
Market Overview * Stocks finished the week with another record-setting session Friday as a government report showing strong economic growth accompanied by mild inflation cheered investors.
* Bond yields fell, driving prices higher, in reaction to the good inflation figures.
Stocks
The Dow Jones industrial average rolled into record territory from the opening bell and never looked back. It stayed solidly higher all day and closed at 3,945.43, which was 19.13 points above the record reached Thursday. For the week, the popular gauge gained 30.95.
Market indicators that encompass a broader range of stocks also beat their previous bests.
The New York Stock Exchange composite index advanced 1.04 to 265.42, and the Standard & Poor’s 500-stock index rose 1.65 to 478.70. Both were higher than their record closes of Thursday.
The Nasdaq Stock Market composite index jumped 3.65 to 796.53 and added 2.25 in the week. It surpassed the all-time high of 794.28 set Jan. 21.
In the broader market, advancing issues outnumbered declines by about 12 to 7 on the NYSE. Trading was heavy, with the Big Board’s volume totaling 312.64 million shares.
Propelling stocks aloft was the government’s first official reading on how the economy fared in the fourth quarter. The Commerce Department said economic growth ran at a surprisingly fast 5.9% annual pace in the final three months of 1993, the best showing in six years. The fourth-quarter increase was stronger than the 5.5% that many economists had predicted.
Among the market highlights:
* Citicorp jumped 1 1/4 to 43 1/8 and was among the active NYSE issues.
* Continental Bank jumped 6 5/8 to 34 1/2 and topped the Big Board’s actives list following word that it has agreed to be acquired by BankAmerica in a deal valued at $1.9 billion. BankAmerica slipped 3/8 to 45 3/8.
* One of the day’s biggest losers was Scientific-Atlanta, which shed 4 7/8 to 26 7/8 in heavy NYSE trading after posting a second-quarter loss Thursday of 12 cents a share.
* Other financial stocks found buyers, including Federal National Mortgage Assn., up 1 3/8 to 89 1/8; Citicorp, up 1 1/4 to 43 1/8, and Bankers Trust, up 1 1/8 to 82 1/4.
* Aetna Life & Casualty said it is cutting 4,000 jobs and will take a $1.025 billion charge against 1993 operating earnings. The stock rose 1 3/4 to 59 7/8.
* Teledyne shares fell 2 1/8 to 23 5/8. On Thursday, the company suspended cash dividends on its common stock.
* America Online shot up 7 1/2 to 60 3/4 after an upbeat earnings report.
In foreign trading, Mexico City’s Bolsa gained 30.29 points to 2,743.2, another new high. The market was driven by hopes for a peaceful ending to the Chiapas conflict.
Other foreign markets got a boost from the subdued U.S. inflation numbers and Wall Street’s response to them. Stocks gained in Frankfurt, London and Paris. However, Tokyo’s Nikkei average closed down 133.91 at 18,757.88.
Credit
The yield on the Treasury’s bellwether 30-year bond fell to 6.21% from Thursday’s 6.26%, pushing prices up another 5/8, or $6.25 per $1,000 face value.
Normally a surge in economic growth should send bond prices lower, on the premise that more aggressive economic activity could lead to inflation and higher interest rates.
But Friday’s report also contained data indicating that, while the economy is growing, inflation remains benign.
The so-called GDP implicit price deflator, a broad-based measure of inflation, came in at 1.3%, well below the 3% some economists were expecting.
In other markets:
* The dollar closed higher in hectic domestic dealings, in a dramatic turnaround from an earlier selloff overseas.
* In commodities trading, gold settled at $376.90 an ounce, down 50 cents on the New York Comex. Silver finished the week at $5.008 an ounce, up 4 cents from Thursday.
Market Roundup, D4
