S&P; 500, NYSE Hit Records As Fed Looms
Stocks ended mostly higher Friday, with some key indexes finishing at record levels, amid heavy trading bloated by the quarterly expiration of stock options and futures.
In the bond market, yields were little changed as traders looked to Tuesday’s Federal Reserve Board meeting and the still-raging question of whether the central bank feels the need to tighten credit.
On Wall Street, the Dow industrials added 20.72 points to 5,888.46 after trading in a narrow range for most of the day. The Dow ended just a hair below its record high of 5,889.20 set on Monday.
A broader blue-chip index, the Standard & Poor’s 500, eclipsed its previous peak Friday, rising 4.03 points to a record 687.03. The New York Stock Exchange composite also hit a new high.
Among other indexes, the Nasdaq composite of mostly smaller stocks rose for the 11th consecutive session, though it remains below its June 5 record. (Investor Spotlight, D5.)
NYSE volume surged to 519.42 million shares as traders bought or sold stock to offset positions tied to the expiration of individual stock options, index options and index futures, so-called derivatives that are used to make leveraged bets in the market or to hedge against market turmoil.
Such “triple witching” expirations occur quarterly and often produce heavy volume, but far less movement in individual stock prices than they did years ago, in part because of disclosure requirements that allow investors to know when large blocks of stock are coming into the market.
Analysts said that apart from the expiration activity, the general mood on Wall Street continues to be upbeat about the economy and corporate earnings.
Whether the Fed will prick the balloon--with higher interest rates--remains to be seen. Bond yields held steady Friday, with the 30-year Treasury bond ending at 7.04%, unchanged from Thursday though up from 6.95% a week ago. The yield has been in the same general vicinity since mid-August.
“It’s a split decision on whether the Fed will boost rates up next week, but for all practical purposes, a [small increase] is built into the stock market, and will have only a minimal effect if it happens,” argued Bob Dickey, analyst at Dain Bosworth in Minneapolis.
Among Friday’s highlights:
* Many tech shares continued to advance, boosting Nasdaq. Intel rose 3/8 to 97 3/8, Dell surged 3 3/8 to 86 1/2, Computer Associates rose 1 5/8 to 62 1/8 and Pairgain Technologies leaped 3 1/16 to 76 1/4.
Also, Microsoft inched up 3/8 to 138 1/8 despite news that the Justice Department has begun an antitrust probe into the firm’s Internet strategy. Microsoft’s archrival on the Net, Netscape Communications, soared 5 3/8 to 50 7/8.
* General Motors’ H-class shares, reflecting the auto maker’s Hughes Electronics division, rose 2 1/2 to 60 1/4 on news that it will buy satellite operator PanAmSat in a $3-billion deal.
* Transport issues were strong. AMR, parent of American Airlines, gained 2 1/2 to 83 1/2, Delta leaped 2 1/4 to 72 5/8 and rail giant Norfolk Southern jumped 2 to 89 3/8.
Market Roundup, D4
