Stocks Adrift, Bonds Steady; Dow Falls 1.78
Blue chip stocks ended slightly lower Friday after being hit by trading linked to options expirations, but bonds held steady as new economic data eased fears of renewed inflation.
The dollar rose slightly against the German mark but eased against the yen, as dealers turned indecisive about the outlook for inflation and interest rates.
The Dow Jones industrial average declined 1.78 points to 3,661.47, ending the week off 12.79 points. In the broader market, declining issues led advancing ones 1,098 to 1,022. Volume on the New York Stock Exchange was heavy, more than 308 million shares.
The Nasdaq index rose 0.66 to 727.97.
Analysts said the volatility brought on by the options expiration kept many investors on the sidelines and made for a session lacking clear direction.
Bonds held steady after economic reports came in as expected, quashing fears that the Federal Reserve Board will raise interest rates again soon.
Industrial output rose 0.5% in March, after a revised 0.6% rise in February. Capacity utilization rose to 83.6% from 83.4% in February.
“The bond market putting on at least a stable tone certainly provides some underpinning for the stock market,” said Marshall Acuff, portfolio strategist at Smith Barney Shearson.
The yield on the benchmark 30-year Treasury bond price finished unchanged at 7.29%. Its price also closed unchanged at 87 16/32.
In overseas stock trading, London shares ended on a firm note, helped by bullish economic statistics. The Financial Times 100-share index closed 36.6 points higher at 3,168.3, up 48 from last Friday.
Tokyo stocks dipped before the close, but still ended stronger. The Nikkei-225 average ended 177.43 points higher at 20,164.63, up 229.64 from last Friday.
In Mexico City, the Bolsa closed at its lowest point of the year after an attack on a military outpost in the southern state of Chiapas was reported. The IPC index of 36 key shares retreated from early gains and fell 7.87 points to 2,199.90.
Oil company shares jumped on the coattails of a rally in oil prices to new five-month highs. On the New York Mercantile Exchange, May oil rose 35 cents to $16.58 a barrel.
“This is a level we’ve not seen since early December on the crude futures, and it’s helping the stocks,” said Gregory Nie, market analyst at Kemper Securities.
Chevron rose 2 1/4 to 90 5/8; Occidental Petroleum gained 7/8 to 17; Triton Energy rose 3 1/4 to 28 3/4.
Among the other stock trading highlights:
* Philip Morris rose 3/8 to 50 after it said late Thursday that it was studying the possibility of separating its tobacco and non-tobacco businesses.
* Digital Equipment tumbled 5 7/8 to 23 after it reported a much larger-than-expected loss for its third quarter. Other computer makers were also off; Apple Computer dropped 1 1/4 to 30 1/4; International Business Machines fell 7/8 to 53; Intel dropped 1/8 to 59 3/4.
* Iwerks Entertainment fell 5 1/4 to 14 after the Burbank-based specialty theater company projected a fiscal third-quarter loss.
* Jefferies Group fell 3 to 34 after the Los Angeles-based securities firm said its first-quarter profit fell 20%.
In other markets:
* The dollar rose to 1.7135 German marks in late New York trading, from 1.7103 marks Thursday.
The dollar traded listlessly against the Japanese yen, dipping to 103.45 yen late in the day in New York, from 104.15 on Thursday.
* Gold prices fell on the New York Commodity Exchange. The most active contract for June delivery dropped 90 cents to $379.40 an ounce.
Market Roundup, D4
Interest Rates:
30-year T-Bond: 7.28%
1-year T-Bill: 4.70%
New York Volume: 309.30 million shares
