Stocks, Bonds Rise on Hopes of Stable Rates
Completing a week of daily 100-point swings in the Dow industrials, stocks yo-yoed anew Friday, rallying along with the bonds on investors’ growing expectations that the Federal Reserve Board won’t raise interest rates next week.
The Dow Jones industrial average rose 33.47 points to close at 7,687.72. The index rose as much as 116 points before late-session selling shaved the gains.
In the broader markets, advancing issues outnumbered decliners by a 13-7 margin on the New York Stock Exchange in moderate trading.
For the week, the Dow finished with a loss of 108.79 points after Monday’s 192-point drop, its second worst point loss ever. The Dow bounced back 154 points on Tuesday.
“Nothing much has happened, but you’ve traveled a lot of miles in between,” said Alfred Kugel, senior investment strategist at Stein Roe & Farnham.
Broad-market indexes were also higher. The Standard & Poor’s 500 list closed up 3.62 points to close at 887.30, the NYSE composite index was up 2.37 points to close at 463.30 and the Nasdaq composite index was up 1.77 points to close at 1,438.15.
The Dow ended last week at a record high of 7,796.51 points, a 22% rise from its 1997 closing low at 6,391.69 on April 11.
Stocks got support from bonds, which broke out of a weeklong slide, lifted by the Fed’s unexpected purchase in the market of U.S. Treasuries with longer maturities.
As the 30-year Treasury rose, its yield fell to 6.73% from 6.78% on Thursday.
Wall Street’s next hurdle will come Tuesday and Wednesday when Fed policymakers will meet to discuss interest rate policy. The consensus on Wall Street is that rates will remain unchanged.
Among Friday’s highlights:
* Leading Dow gainers was Procter & Gamble, up 2 13/16 at 139 5/16.
* Among the best performers were cyclical stocks, companies whose sales and profits do best when the economy is ebullient. Caterpillar rose 2 3/8 to 108, Ingersoll-Rand rose 1 1/16 to 61 and Goodyear Tire & Rubber rose 1 1/2 to 63 1/4.
* AT&T; fell 5/16 to 35 13/16 and SBC Communications fell 3/16 to 59 15/16 after reports that merger talks between the telecommunications companies were unraveling.
* Drug issues climbed, led by Warner-Lambert, up 4 15/16 to 123 15/16, Merck, up 3/4 to 102 1/2 and Pfizer, up 2 3/4 to 122.
* Banks were the main beneficiary of the drop in interest rates, as the outlook for lending margins improved. Banc One rose 1 to 49 3/4, Citicorp gained 1 to 120 3/4 and BankAmerica rose 1 5/16 to 66 3/8.
Overseas, Tokyo’s Nikkei stock average closed down 0.5%. Frankfurt’s DAX index was little changed and London’s FTSE-100 was down 0.4%.
Market Roundup, D4
