FINANCIAL MARKETS : Stocks Make an About-Face; Dow Jumps 33.6 : Markets: One analyst called it “a natural knee-jerk reaction” after sharp drop earlier in the week. Trading was light.
In a surprisingly strong about-face, stocks closed sharply higher in Friday’s abbreviated trading sessions, although analysts cautioned that the rally may have been exaggerated because of light volume.
The Dow Jones industrial average rose 33.64 points Friday to 3,708.27. The gain ended a week that took the Dow down 46 points Monday and another 92 Tuesday before it steadied Wednesday with a slight 3-point loss ahead of the Thanksgiving holiday. For the week, the Dow fell 106.99 points.
Unlike the early part of the week, bonds did not make much of a move. The benchmark 30-year U.S. Treasury bond yield barely slipped to 7.94% from 7.95% Wednesday.
Stocks advanced broadly Friday, with strength in the pharmaceutical and high-tech sectors.
In the broad market, advances topped declines 1,491 to 564, with a light 113,820,500 shares changing hands on the New York Stock Exchange.
Trude Latimer of Ferguson, Andrews called the advance a “continuation of bottom fishing” from Wednesday.
“A fair number of people believe there will be a year-end rally, even if they do not believe it’s a trend that will follow through,” she said.
“Today is a natural knee-jerk reaction to what happened earlier in the week,” said Alfred E. Goldman, vice president at A.G. Edwards & Sons Inc. in St. Louis.
A flood of new economic data next week may decide how the markets end the year. Included are reports on purchasing orders, the gross domestic product and November employment.
The employment report data on hourly wages will get a careful look as the October figure was up a strong 0.7%.
The hourly wage figure is seen as a sign of budding inflationary pressures. Inflation erodes the value of bonds and is being closely monitored by the Fed in charting its policy on interest rates.
On Tuesday, the Dow industrials plunged 91.52 points to 3,677.99, the biggest one-day loss since the Fed started pushing interest rates higher in February. The Fed is hoping to slow economic growth and forestall inflation. Fears also swept the market about corporate earnings and the desirability of stocks because some investors fear the Fed tightenings will dampen economic growth and make it difficult for corporations to boost profits in the coming quarters.
Among market highlights:
* Voting shares of Box Energy Corp. rose 38%, following a $48-million takeover bid late Wednesday by Idaho potato magnate J. R. Simplot. Simplot’s all-cash offer, equal to about $15 a share, would end a seven-year feud between the octogenarian investor and the management of Box Energy.
Shares of Box Energy’s Class A voting stock climbed 4 1/4 to close at 15 1/2, the second-biggest percentage increase on the U.S. composite market. News of the offer also rallied the company’s more widely traded Class B non-voting stock, which was up 3/4 at 9 3/4.
* High-technology stocks were among the day’s winners, with Hewlett-Packard up 1 5/8 at 97 1/4, Motorola up 1 at 56 3/4 and International Business Machines gaining 1 1/4 to 70 7/8.
Intel Corp., however, the day’s most active Nasdaq stock, was down 1 1/4 at 63 7/8 after acknowledging it knowingly sold its flagship Pentium microprocessors with a “bug” that can lead to errors in sophisticated mathematical calculations.
* Stocks that are sensitive to changes in the economy benefited. Allied Signal rose 1 1/4 to 32 1/8, Alcoa rose 2 3/8 to 80 3/8 and International Paper was up 1 1/4 to 69 5/8.
* Stocks ended mostly lower abroad. In Tokyo, the Nikkei index slipped 0.2%. In London, the Financial Times-Stock Exchange 100-share index closed 0.2% lower, while Frankfurt’s DAX index ended 0.1% lower. Stocks in Paris rose 0.6%. The Mexican market’s Bolsa index closed up 46.21 points at 2,485.17--a gain of 1.89%. At the end of 1993, the IPC stood at 2,602.63.
* U.S. precious metals markets were closed Friday but gold closed in London at $384.95 per ounce, up from $384.20 late Thursday. Silver traded in London at $5.16 an ounce, up 1 cent.
* Hog prices bounced higher Friday in the Chicago Mercantile Exchange futures market as meat packers sought hogs to fill slaughter schedules. Traders said the rebound would not last as marketing schedules return to normal. Cash prices are trading at the lowest levels in 20 years and have dragged futures down. Analysts said aggressive herd expansion created a bumper supply of hogs this year.
New York’s futures exchanges were closed Friday, extending Thursday’s Thanksgiving holiday.
