FINANCIAL MARKETS : Dow Surges 51; Bond Prices and the Dollar Rise
The stock market shot higher for the second time in three days after a government report showed second-quarter economic growth was weaker than expected, easing concern about inflation and higher interest rates.
A market-wide rally began at the opening bell after the Commerce Department reported that the second-quarter gross domestic product figure was revised upward less than expected, to 3.8% from 3.7% a month earlier.
The Dow Jones industrial average, which soared more than 70 points Wednesday, rose another 51.16 points to 3,881.05 on Friday, reaching levels not seen since March 18, when the blue chip barometer closed at 3,895.65. The Dow gained an impressive 125.94 for the week.
The Dow was up as much as 65 points at one point in Friday’s session. The strength of the rally prompted the New York Stock Exchange to impose “circuit breaker” restrictions on program trades shortly before noon.
Advancing issues outnumbered decliners in the broader market by about 13 to 6 on the New York Stock Exchange, where 305.6 million shares changed hands.
Unlike Wednesday’s rally, which was dominated by blue chip issues, Friday’s advances came across the board. The NYSE’s composite index rose 2.64 points to 260.82. The Nasdaq index of mostly smaller companies advanced 8.14 points to 762.94, and Standard & Poor’s 500 list added 5.72 points to 473.80.
The GDP report also pushed bond rates lower and the dollar higher.
The Treasury’s key 30-year bond yield dropped to 7.48% from 7.53% on Thursday, while its price, which rises when yields fall, gained 5/8 point, or $6.25 per $1,000 in face value.
Meanwhile, the dollar made one of its biggest single-day gains of the year against the German mark on the strength of the solid rallies in stock and bond markets.
In New York, the greenback was quoted at 1.575 marks, up more than 2% from 1.543 on Thursday. The dollar also rose to 100.46 Japanese yen, up from 99.71 on Thursday and the highest level since Aug. 8.
Among the market highlights:
* Of the 30 components of the Dow average, nine were up a point or more. They were led by Caterpillar, which rose 3 5/8 to 115 5/8, followed by Procter & Gamble, up 1 7/8 to 59 3/4, and Philip Morris, up 1 3/4 to 58 5/8.
* Technology issues led small-company stocks higher. Cisco Systems was up 1 5/8 to 25 5/8, Sun Microsystems gained 2 7/8 to 28 and Microsoft tacked on 11/16 to 56 7/8.
* General Motors was up 1 3/8 at 51 3/4 after the car maker settled a strike at a parts plant.
* Among cyclical stocks, Aluminum Co. of America rose 1 3/8 to 81 1/8.
* Among financial stocks, JP Morgan ended up 5/8 to 64 1/4.
* Mining company Asarco rose 1 7/8 to 29 7/8. Prudential Securities upgraded the stock to “buy” from “hold.”
Overseas, London shares gained strength throughout the day, with the Financial Times 100-share average closing 30.9 points higher at 3,265.1. The average gained 73.7 over the week and is 14.8% above its 1994 low of 2,844.7 hit June 27.
In Frankfurt, the DAX 30-share average ended 9.33 points higher at 2,161.54, up 11.97 from last Friday. Stocks also ended steady in Tokyo, with the 225-share Nikkei average rising 28.20 points to close at 20,471.49. That was down 41.21 from last week, however.
Mexico City’s Bolsa index dropped 4.04 points to 2,772.17.