FINANCIAL MARKETS : Stocks, Bonds Mixed In Wake of Jobs Report

U.S. financial markets ended mixed Friday in relatively slow trading after the government’s report on November employment failed to offer new clues about the economy.

The Dow Jones industrial average eased 2.53 points to 5,156.86 but still managed to finish the week up 69.73 points. The Dow’s record closing high for the week was 5,199.13 on Wednesday.

In the bond market yields were mostly lower Friday but above the day’s best levels. The 30-year Treasury bond yield closed at 6.05%, off from 6.08% Thursday and unchanged from a week ago.

Stocks and bonds started the day higher after the Labor Department reported November employment data about on par with estimates.

The government said the nation’s unemployment rate edged up to 5.6% in November as businesses added just 166,000 jobs--many of which reflected special factors that don’t indicate significant new strength in the economy.

The government also said that sales of new homes fell 2.7% in October. But on a positive note, the University of Michigan’s periodic national consumer sentiment survey showed surprising strength in early December.

Analysts said the data, taken as a whole, may not paint a convincingly weak enough picture of the economy to justify a cut in short-term interest rates when Federal Reserve Board policy makers meet on Dec. 19.

Fed Vice Chairman Alan Blinder was quoted in a news report Friday as saying that financial markets were overly optimistic about a rate cut on Dec. 19.

Despite stunning recent stock and bond market rallies that were based in large part on an expected rate cut, “The economy is performing right in line with what the Fed claims it was seeking,” contends James Glassman, economist at Chemical Securities in New York.

But while many Wall Streeters worry about a wild sell-off in financial markets if the Fed balks at cutting rates, there was no sign of deep concern on Friday.

The bond market, however, did stage a very quick turnaround after its initial rally. The two-year T-note yield, for example, opened at 5.37%, fell as low as 5.31% and ended the day at 5.41%.

In the stock market action was fairly lethargic. Winners and losers were evenly matched on the Big Board as trading volume fell to its slowest pace in two weeks.

Among broad market indexes, the Standard & Poor’s 500 index added 1.31 points to 617.48. The Nasdaq composite index was stronger, rising 6.85 points to 1,060.02 as buyers flocked back to some big-name technology issues.

Among Friday’s highlights:

* Some major tech stocks may have gained as investors reinvested funds pulled out of smaller, highly speculative Internet-related stocks this week.

Hewlett-Packard, for example, gained 4 5/8 to 86 7/8 after brokerage Donaldson Lufkin & Jenrette added the stock to its “buy” list.

Other winners included Sun Microsystems, up 6 5/8 to 99 3/4; Microsoft, up 4 to 94 1/2; Oracle, up 2 3/8 to 46 5/8; Intel, up 1 3/4 to 63 1/4; IBM, up 2 1/8 to 96 7/8; and Micron Technology, up 2 7/8 to 54 3/4.

* In the Internet sector, Uunet dropped 3 3/4 to 55, America Online eased 1/4 to 41 1/8 and Netscape lost 4 to 128 1/2. But Spyglass added 2 3/4 to 98.

* Some consumer growth stocks added to recent gains. Warner Lambert rose 1 1/2 to 94 1/4, Unilever N.V. rose 2 1/4 to 140 3/4 and Gillette surged 1 1/8 to 53 1/4.

But Philip Morris sank 1 3/8 to 89 1/4. The Wall Street Journal on Friday described the contents of an internal company draft report that said nicotine is chemically similar to addictive drugs such as cocaine. Tobacco executives have denied in sworn Congressional testimony that cigarettes are addictive.

* Many industrial issues continued to weaken on economy worries. Phelps Dodge fell 7/8 to 66 3/8, Cummins Engine lost 1/2 to 37 7/8, Emerson Electric dropped 1 1/4 to 79 1/2 and Alcoa was off 7/8 to 56.

Elsewhere, Mexico’s central bank said it bought pesos to shore up its currency, which was battered in early trading by investors demanding U.S. dollars to cover year-end transactions.

The purchase is the third time in a month that Banco de Mexico sought to ease pressure on the currency. On Nov. 14, the central bank bought $125 million to bolster the currency, and on Nov. 9 it acquired $175 million. Central bank officials declined to disclose the amount of pesos purchased Friday.

The currency was trading at its lowest level in 3 1/2 weeks when the central bank decided to buy pesos. It closed at 7.71 pesos to the dollar.

Mexico’s Bolsa stock index fell 11.81 points to 2,655.39.

In Tokyo the Nikkei-225 stock index’s latest rally came to a halt, as it lost 125.35 points to 19,286.97.

In commodities trading, forecasts of unusually cold weather in the Midwest and Northeast drove heating oil prices Friday to their highest levels since October, 1993.

“This winter could rival those of the late 1970s and early 1980s,” said Weather Trades President Jim Roemer.

January heating oil futures on the New York Merc rose 1.31 cents to 56.59 cents a gallon.