Stocks ended on a down note Friday, as the busiest week of trading in Wall Street history--and one of the most volatile--came to an end and investors fretted anew about corporate earnings.
The Dow Jones industrial average fell 37.36 points to 5,426.82 on Friday. The loss came to just 83 points for a week that started with an ominous slide of nearly 330 points, or 6%, before a stunning rebound took hold Tuesday afternoon.
Broader measures also slipped Friday, with the tattered Nasdaq market showing the worst losses after two strong sessions.
"I'm glad this week is over," said Hildegard Zagorski, an analyst at Prudential Securities. "It was a wild week with lots of gyrations--quite dramatic, quite scary . . . . Today was a cautious regrouping day."
Analysts attributed much of Friday's weakness to the bond market. Long-term interest rates edged higher after easing below a psychologically important barrier a day earlier. Bonds had rallied Thursday as long-term bond yields--a key determinant of corporate and consumer borrowing costs--fell below 7% for the first time since the markets started to unravel two weeks ago on fears of a resurgence in inflation. Inflation makes fixed-income investments such as bonds less valuable. Higher interest rates can hurt stocks by raising corporate borrowing costs and slowing consumer spending.
On Friday, bond traders took some profits on Thursday's rally, and the yield on the 30-year Treasury rose to 6.97%, up from 6.92% on Thursday.
Declining issues outnumbered advancers by a 7-5 margin on the New York Stock Exchange, where volume totaled 402.25 million shares as of 4 p.m., down from 469.65 million for the previous session. It was the busiest week in NYSE history, with almost 2.5 billion shares changing hands.
The technology-laden Nasdaq composite index fell 12.14 points to 1,097.68 but finished the week with a loss of just 6 points. At the low point of this week's steep but brief sell-off, the Nasdaq was off 95 points, or more than 8.5%.
The NYSE composite index fell 2.19 points to 342.91, the Standard & Poor's 500-stock index fell 4.83 points to 638.73, and the American Stock Exchange market value index fell 2.87 points to 548.76.
Among the factors dragging stock prices lower was the thought that individual investors may have less resolve in the face of a market decline than had previously been hoped, traders said. More than $4 billion of assets was withdrawn from equity mutual funds in the week of July 17, the most since AMG Data Services began tracking the figure in 1992.
Analysts said Friday's trading was also affected by the double-witching expirations of July S&P; 100 index options and July S&P; 500 index options.
Among Friday's highlights:
* Airline stocks exhibited continued weakness in the aftermath of the TWA plane crash off Long Island, N.Y. AMR, parent of American Airlines, fell 2 3/8 to 78 3/4; UAL, parent of United Airlines, lost 1 3/4 to 46; Delta was off 2 1/8 to 72 3/4; and TWA slipped 3/4 to 9 1/2.
* Sunbeam soared 6 1/8 to 18 5/8. Late Thursday, the company said it had named Albert Dunlap, a former chairman of Scott Paper who has a reputation for aggressive cost cutting, chairman and chief executive.
* Concern that growth in the computer industry is decelerating extended the slide that has taken 87 points from the Nasdaq this month. Sun Microsystems was one of the index's biggest decliners, falling 3 7/8 to 55, after reporting profit that beat analysts' estimates by only a penny a share.
High-tech high fliers Netscape, down 3 1/2 at 53, and Iomega, down 5 1/2 at 22 1/2, suffered similar fates on Nasdaq after their results failed to beat expectations. Shares of biotech leader Amgen, however, rose 7/8 to 56 1/4 on a report of better-than-expected profits.
Overseas, Tokyo's Nikkei-225 stock average fell 0.4%, Frankfurt's DAX index rose 0.6%, and London's FTSE-100 rose 0.5%.
Market Roundup, D3