Stocks Laze Day Away After Record Highs
U.S. stocks closed a frenzied week mixed on Friday, as investors took a breather.
Meanwhile, Asian central bankers met and announced modest plans to try to stem currency instability in the region, where many countries’ currencies have plunged in recent weeks.
On Wall Street, the Dow Jones industrials eased 3.49 points to 8,113.44 in an uninspired session that saw winners and losers nearly evenly matched on the New York Stock Exchange.
Among broad market indexes, the Standard & Poor’s 500 slipped 1.51 points to 938.79 while the Nasdaq composite inched up 0.45 point to 1,569.58.
Yields edged higher in the bond market on some strong U.S. economic data, and the dollar also advanced, continuing to rack up hefty gains against European currencies.
Still, if stocks were basically stalled on Friday, they had already gotten in a week’s worth of activity on Tuesday and Wednesday, when investors reacted with glee to Federal Reserve Chairman Alan Greenspan’s generally upbeat assessment of the economy.
For the week the Dow industrials shot up 223 points, or 2.8%, lifting the year-to-date gain to 25.8%. The Nasdaq composite rose 1.4% for the week and is up 21.6% year-to-date.
Many investors see little reason to leave the market party just yet, because of widespread belief that the Fed has no intention of tightening credit any time soon.
On Friday, bond yields showed only a modest reaction to some healthy economic data. The 30-year Treasury bond yield closed at 6.45%, up from 6.43% on Thursday but still well below the 6.52% yield of a week earlier.
Investors’ lack of concern about interest rates will be tested next week, when the markets will face a barrage of economic data, including the second-quarter employment cost index, and July employment trends.
“You’ll see an economy which is probably growing faster than it did in the second quarter but with no significant inflation pressure,” predicted Ron Hill, research chief at Brown Bros. Harriman & Co. “It doesn’t get much better.”
That is not what they’re saying in Southeast Asia, however. Key currencies continued to slide in value this week amid worries about the region’s economic health.
On Friday, a meeting of 11 Asian central bank representatives in Shanghai produced a statement pledging short-term liquidity financing to nations that need it, but little in terms of concrete steps to halt currency devaluations.
For the week, the Thai baht fell 6% against the dollar, the Philippine peso lost 2% and the Indonesian rupiah dropped 5%, adding to the month’s losses.
The main Thai stock index dropped 1% for the week, while Philippine shares tumbled 3.7% and Indonesian shares lost 2%.
Among Friday’s U.S. highlights:
* Pfizer fell $2.13 to $59.63 after the firm warned that profit growth will be in the single-digit range in the second half of 1997.
Other drug stocks falling included Eli Lilly, down $3.19 to $112.94; American Home Products, down $1.88 to $83; and Warner-Lambert, down $1.13 to $141.88.
* High-flying personal computer stocks were hit by profit-taking after Gateway 2000’s second-quarter earnings report contained some disappointing elements, including a surprising inventory buildup.
Gateway shares fell $2.69 to $40.50, while Compaq slid $5.25 to $135.63 and Dell Computer dropped $7 to $163.
* On the plus side, PairGain Technologies jumped $1.06 to $21.94, continuing to advance on rumors that either Lucent Technologies or ECI Telecom may bid for the firm.
In Mexico City, the Bolsa stock index lost 0.8% to 4,722.42 on a disappointing earnings report from Cemex.
Market Roundup, D4
