Stocks surged to record highs Friday as the U.S. dollar and bond prices also rose, all bolstered by renewed expectations that the U.S. economy will keep growing moderately without fanning severe inflation.
The Dow Jones average of 30 industrial stocks rocketed 52.22 to a record 4,035.61, easily surpassing its previous high of 4,011.74 set Feb. 24. At one point in the session, the Dow was up 65 points, and for the week the blue-chip gauge posted a 46-point gain.
Broader indexes also rose sharply: The Standard & Poor's 500-stock composite index hit an all-time high, and gainers outpaced losers by more than 2 to 1 on the New York Stock Exchange.
The dollar strengthened on the strong U.S. economic data and positive reaction to Mexico's plan to mend its economic problems and recent signals from the Clinton Administration that it will support the greenback.
In late New York trading, the dollar stood at 1.4133 marks, up from 1.3940 on Thursday. The dollar was quoted at 91.09 Japanese yen, up from 90.50 on Thursday.
Prices of the Treasury's bellwether 30-year bond rose nearly 5/8 point, or $6.25 for every $1,000 in face value, and its yield dropped to 7.46% from 7.51% on Thursday.
The rally in stocks, bonds and the dollar was triggered in part by a Labor Department report released early Friday showing a sharp improvement in the nation's jobless rate, to a 4 1/2-year low of 5.4% in February, down from 5.7% the prior month.
On many occasions in the past, such signs of a strengthening economy have pushed stocks lower on worries that the Federal Reserve Board would boost interest rates to slow the economy and curb inflation.
Not this time, though. Using "the contortions of logic that only Wall Street is capable of," stock and bond prices rallied following the jobless report, said James Solloway, research director at Argus Research in New York.
The report, by signaling a still-robust economy, convinced investors that corporate profits would not come under pressure even if interest rates rose a bit further. Indeed, the dollar's problems, by reducing the cost of U.S. exports, "have U.S. exporters jumping up and down with glee at the huge increase in their competitiveness," Solloway said.
Also, although the unemployment report shows the jobless rate declined, "underneath it there was some weakness" in terms of wages and labor productivity that indicate the economy's growth and inflation remain moderate, said William H. Gross, managing director of Pacific Investment Management Co. in Newport Beach.
"That suggested to investors there there might be the possibility of a 'soft landing' (by the economy) after all, and that's really what stocks and bonds both want," he said.
Robert Greber, president of the Pacific Stock Exchange, also noted that even when the dollar was tumbling against the yen and mark, U.S. stock and bond markets "held up dramatically well," leaving them poised to move up once the dollar stabilized.
That's what happened Friday after the dollar continued to recover against the yen, mark and other European currencies.
The dollar's rebound also reflected expectations that the Fed will again raise U.S. interest rates if necessary to fight inflation and support the buck.
The battered Mexican peso also rebounded after the government announced a package of fiscal austerity measures aimed at bolstering confidence in the nation's economy.
The peso's gain in turn sparked a broad rally in Latin stocks, with Mexico City's Bolsa index rising 49.15 points to a two-week high of 1,589.69.
Brazilian stocks soared nearly 26%, their biggest daily gain in four years, after the government moved to crack down on speculation against Brazil's new currency, the real. The Bovespa index in Sao Paulo rose 5,479 points to 26,862.
In U.S. trading, the S&P; 500 index rose 6.41 to a record 489.57, while the NYSE composite index gained 3.22 to 264.83. The Nasdaq composite index rose 5.98 points to 802.22, just shy of its record 803.93 set March 18, 1994.
Trading was busy, with Big Board volume totaling 382.9 million shares, up from 319.1 million Thursday.
* JOB REBOUND
Unemployment rate in California and nation fell sharply. A1