Dow Record, Lower Yields Follow Reports
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 tumbled on optimism about the low inflation figures. Gold stabilized after Thursday’s big drop.
Stocks
The Dow Jones industrials rolled into record territory from the opening bell and never looked back. The Dow finished the day up 19.13 points at a record 3,945.43. For the week, the blue-chip index gained 30.95 points.
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.
Besides the Dow, broader market indicators also beat their previous highs, as investors bet that a healthy economy would lead to continuing corporate profit growth. The New York Stock Exchange composite index advanced 1.04 points to a record 265.42.
Also setting a new high was the Nasdaq Stock Market composite index of mostly smaller stocks, which jumped 3.65 points to 796.53, topping the previous record of 794.28 set Jan. 21.
Advancing issues outnumbered declines by about 12 to 7 on the NYSE, though volume eased from Thursday to 312.6 million shares.
Among the market highlights:
* Financial stocks led the market rally, boosted by the merger announcement between BankAmerica and Continental Bank, and by expectations that low inflation will allow interest rates to remain low as the economy expands.
Citicorp jumped 1 1/4 to 43 1/8, Barnett Banks surged 1 3/8 to 42, Federal National Mortgage gained 1 3/8 to 89 1/8, First Interstate leaped 3 to 71 3/8 and Bancorp Hawaii added 1 1/2 to 46 1/2.
* Among insurers, Aetna Life jumped 1 3/4 to 59 7/8 after saying it will cut 4,000 jobs. Also gaining in that group were Cigna, up 2 to 68 1/4, and Aon, up 1 1/4 to 48.
* Industrial stocks pulling the market higher included Clark Equipment, up 2 1/2 to 57 1/4; GM Hughes, up 1 1/4 to 39 1/2, and Phelps Dodge, up 2 1/2 to 53 1/4.
* A stronger than expected earnings report boosted America Online 7 1/2 to 60 3/4. But communications equipment supplier Scientific-Atlanta plunged 4 7/8 to 26 7/8. Its earnings fell short of estimates.
* Another loser was conglomerate Teledyne, down 2 1/8 to 23 5/8 after suspended cash dividends on its common stock.
Mexico City’s Bolsa gained 30.29 points to 2,743.2, another new high, driven by hopes for a peaceful ending to the Chiapas conflict.
Stocks also gained in Frankfurt, London and Paris. However, Tokyo’s Nikkei average closed down 133.91 points at 18,757.88.
Other Markets
The yield on the Treasury’s bellwether 30-year bond fell to 6.21% from Thursday’s 6.26%, despite the report of robust fourth-quarter economic growth.
Normally, a surging economy should send bond yields higher on the premise that more aggressive economic activity could lead to inflation and higher interest rates.
But Friday’s government 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% (annualized) in the quarter, well below the 3% some economists were expecting.
In other markets Friday:
* Gold, which had plunged $7.10 on Thursday, eased 50 cents to $376.90 an ounce on the New York Comex, stabilizing despite the low inflation report. Silver finished the week at $5 an ounce, up 4 cents.
* Grain prices tumbled under waves of selling tied to diminished prospects for U.S. exports.
* The dollar surged on the economic news. It closed at 109.80 Japanese yen in New York, up from 108.55. It also closed at 1.743 German marks, up from 1.729.
Market Roundup, D4
