Dollar Rises; Stocks Up in Light Trading
The dollar rebounded against the Japanese yen Friday ahead of the long Fourth of July weekend, after slumping to a new post-World War II low in Tokyo.
The relative calm after several days of a dollar slide took pressure off stocks, which ended firmer.
In New York, the dollar closed at 98.55 yen, up from 98.50 on Thursday. Earlier in Tokyo, the dollar set a new low of 97.68 yen before closing at 98.78 yen.
The Bank of Japan intervened to rescue the dollar as it set the postwar low against the yen in Tokyo. The aggressive buying of dollars by the Japanese central bank spearheaded a short-lived dollar rally as sellers rushed to take profits ahead of the three-day holiday weekend.
The dollar ended at 1.596 German marks, up from 1.588 on Thursday.
On Wall Street, the Dow Jones industrial average rose 21.69 points to 3,646.65, up 9.71 for the week. In the broader market, rising issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange.
The trading volume on the Big Board was a scant 199.03 million shares, the second-lowest of the year, as investors declined to take positions before the holiday.
“It’s definitely a pre-holiday lull,” said Douglas Myers, vice president of trading at Interstate/Johnson Lane. “Nobody is going to venture any bets.”
All U.S. government offices, financial markets and commercial banks will be closed Monday for the Independence Day holiday.
The Nasdaq composite index of mostly small firms finished up 0.89 points at 706.85 after being depressed for most of the session by weaker computer issues. The Nasdaq gained 13.06 for the week.
The Treasury market ended a volatile week on a quiet note, with the long bond’s yield edging downward despite a fresh sign of potential inflation.
The 30-year bond yield, which rose sharply Thursday, eased to 7.60% from 7.61% the day before. Its price, which moves in the opposite direction, edged up 1/16 point, or 63 cents per $1,000 in face value.
The federal funds rate, the interest on overnight loans between banks, was 4.25%, down from 10% on Thursday. The sharp jump Thursday was caused by seasonal bank activity at the end of the second quarter.
Despite the release of several economic reports, only the June survey on corporate purchasing trends seemed to gain the attention of traders.
One report showed growth in manufacturing eased slightly at midyear, a government forecasting gauge signaled economic activity was shifting to a lower gear, and the National Assn. of Purchasing Management reported prices paid by industry rose at the fastest pace in nearly six years.
That spurred fresh speculation that the Federal Open Market Committee, the Federal Reserve Board’s policy-setting arm, will raise the federal funds rate at its meeting Tuesday. It would be the fifth rate hike since February.
Among Friday’s highlight’s:
* IBM fell 1 3/4 to 57 and led the NYSE action in volume. After the market closed, Lehman Bros. downgraded the stock, saying revenue growth could slow.
* Microsoft fell 1 1/4 to 50 1/4. Apple lost 3/4 to 25 3/4 and Dell slid 1 1/4 to 25 1/8.
* Circus Circus was the second-largest volume on the NYSE and rose 4 1/4 to 25 3/4. The Wall Street Journal reported that Bally Entertainment is seeking federal antitrust clearance to purchase 25% of the gaming concern. Bally was up 1/4 at 6 7/8.
* Other gaming stocks rose, including Caesars World, up 3 1/4 to 39 1/2, and Promus, up 1 3/8 to 31.
* CBS fell 6 to 307 after soaring 50 on Thursday after the network said it was merging with QVC. Merrill Lynch and Oppenheimer removed their “buy” ratings from CBS.
* Alcoa was up 2 3/8 to 75 1/2 and International Paper added 1 1/2 at 67 3/4.
Overseas markets closed mostly higher. London’s Financial Times 100-share average ended up 17.2 points at 2,936.4, while in Frankfurt, the DAX 30-share average ended up 11.18 at 2,036.52, a gain of 40.54 over last Friday. Shares also closed higher in Paris. In Tokyo, the 225-share Nikkei average fell 100.52 points to 20,543.41.
Mexico City’s Bolsa index closed with a slight gain of 0.07 point at 2,262.65.
Market Roundup, D3
