Dow Drifts, and So Does the Snow, in Session Cut Short by the Weather

Blue-chips stocks recovered from a morning drop to close slightly lower in a session cut short by a severe snowstorm in the New York area.

It was the first time the New York Stock Exchange had closed early due to weather since Feb. 6, 1978.

The 2:30 p.m. EST closure was 90 minutes ahead of the regular closing. The exchange took the step after major commodities markets and the government bond market closed because of the storm.

A securities industry source, who spoke on condition of anonymity, said major brokerages had pressured the NYSE for an early close because Wall Street workers faced a treacherous journey home. The NYSE normally is averse to suspending regular trading hours for any reason.

The Dow Jones industrial average finished at 3,894.78, off 0.56 point, which left it up 23.36 points, or 0.6%, for the week. The Dow drifted at neutral levels for much of the abbreviated session until futures-related selling temporarily depressed it by more than 20 points around midday.

In the broad market, declining issues beat gainers 3 to 2 on light NYSE volume of 213.4 million shares.

Although the weather was the main topic, financial markets were jittery following stocks’ renewed slide Thursday.

Analysts said many investors remain nervous in the wake of the Federal Reserve Board’s decision to tighten credit a week ago. That news caused a 96-point plunge in the Dow last Friday, and stocks have been struggling to regain their footing since.

Among Friday’s highlights:

* Profit takers continued to hammer auto stocks and other industrial issues. GM dropped 1 1/8 to 61 1/8, Chrysler dipped 3/4 to 59 and Ford fell 1/2 to 65 1/2.

Also, Alcoa lost 1 1/8 to 78 1/8, Bethlehem Steel eased 5/8 to 23, Union Carbide lost 1 to 24 1/2 and Phelps Dodge sank 2 3/8 to 53 3/8.

* Airline stocks were weak. AMR, parent of American, fell 1 5/8 to 65 1/8, USAir slid 1 to 12 1/4 and Delta gave up 1 to 51 1/2.

* In the tech sector, computer networking company Cisco Systems gained 2 3/8 to 74 3/8 after it reported solid quarterly earnings.

But video-conferencing systems firm PictureTel plunged 2 1/4 to 14 3/4 after Goldman Sachs cut earnings estimates.

* Another big loser was Timberland, the footwear and apparel maker, which tumbled 9 7/8 to 43 1/2 after its fourth-quarter earnings fell below estimates.

* Procter & Gamble added 1 3/8 to 58 3/4 after Dean Witter recommended the stock.

Foreign markets took their cue from Wall Street’s Thursday drop. In London, the FTSE-100 index fell 28.1 points to 3,378.9. Frankfurt’s DAX-30 gave up 28.35 points to 2,090.61. In Mexico City, the Bolsa index eased 16.38 points to 2,802.06, its third straight drop. In Toronto, the TSE-300 index tumbled 36.37 points to 4,405.60.

The Tokyo market was closed for a national holiday.

Other Markets

Mixed signals on inflation triggered wild swings in the Treasury market, but by the session’s early close interest rates were modestly lower across the board.

The 30-year Treasury bond yield fell to 6.40% from Thursday’s 6.45%. Among shorter-term issues, the yield on three-month T-bills eased to 3.33% from 3.35%.

The major news of the day was the Labor Department’s report that its producer price index, which provides a gauge of inflation at the wholesale level, rose a lower-than-expected 0.2% in January.

The news initially pushed interest rates lower because it showed that inflation stayed low, thus lessening the likelihood that the Fed will raise short-term interest rates again soon.

But some traders apparently lost enthusiasm after refocusing on the so-called core rate of inflation, which excludes the volatile food and energy sectors. By midmorning, yields were rising again.

Later, buyers returned after the University of Michigan reported a drop in consumer confidence in the economy this month. A weaker economy would reduce the chances of the Fed tightening credit again.

Elsewhere:

* The dollar fell to a three-month low against the Japanese yen after President Clinton and Japanese Prime Minister Morihiro Hosokawa failed to clinch a trade agreement in a long-awaited summit. The dollar fell to 106.80 yen in New York from 108.18 on Thursday.

* Gold for current delivery settled at $380.00 an ounce, down $2 on the New York Comex. Silver lost 6.4 cents to $5.25.

Market Roundup, D4