Blue Chips Rally; Bond Prices Rise
Blue-chip stocks jumped Friday and bond prices rose as investors wrestled with new jitters over economies in Asia.
The Dow Jones industrial average rose 54.46 points to 7,881.07 despite slipping to a 35-point loss amid the latest developments overseas. For the week, the index rose 308.59 points. Friday’s gain was the Dow’s sixth in the last seven sessions.
Several broad-market measures also struggled higher by the close despite falling into negative territory following reports that Yamaichi Securities, one of Japan’s “Big Four” securities houses, plans to close.
Technology stocks, perceived to have the greatest exposure to Asia’s economic woes, and smaller-company issues trimmed their losses but finished lower for the day.
The Nasdaq composite index, laden with high-technology issues, fell 5.81 points to 1,620.75, and the Russell 2,000 index of smaller companies fell 0.65 points to 435.05.
“In light of the fact that you have a major Japanese securities firm throwing in the towel, today’s rally is fairly decent,” said Charles White, portfolio manager at Avatar Associates. “We’ve started to see the impact of Asian markets muted here. While there’s still some sensitivity, it’s not as pronounced as before.”
In the broader market, advancing issues led declines by 6 to 5 in heavy trading on the New York Stock Exchange.
The Standard & Poor’s 500-stock list rose 4.11 to 963.09, about 20 points from its Oct. 7 peak of 983.12; and the NYSE composite index rose 2.31 to 502.85, less than 12 points from a new high.
Traders attributed the late surge in blue chips to the so-called double witching expiration of stock index futures and options.
Renewed worries about Japan’s economy sent investors rushing to safety, which boosted bonds as well as blue-chip stocks.
The 30-year Treasury rose, lowering its yield to 6.03% from 6.06% Thursday. Bond prices and yields move in opposite directions.
The report that Yamaichi, Japan’s fourth-largest brokerage, decided to ask Tokyo for permission to shut down renewed worries on Wall Street over economies in Asia, and the impact of a regional downturn on U.S. corporate profits.
“It reinforces that all the troubles over there are not over by a long shot,” Jim Benning, a trader at BT Brokerage, said.
The battered Japanese stock market gyrated sharply this week amid uncertainty over how aggressively the government would move to shore up the financial system.
On Thursday, investors were heartened by news that Prime Minister Ryutaro Hashimoto, reversing his stance for the second time this week, said the government may tap public funds to help Japanese banks. On Friday, the Nikkei News service said the Japanese central bank plans to extend loans to protect the assets of Yamaichi’s customers.
Among Friday’s highlights:
* The biggest Dow gainers were Disney, up $4.06 to $94.75; Merck, up $2 to $94.56; Exxon, up $1.25 to $63.94; and DuPont, up $1.25 to $62.50.
* Nasdaq’s decline was driven in part by Applied Materials, off $1.38 to $36.38; and Dell Computer, down $2.31 to $83.38.
PC maker Micron Electronics fell $2.56 to $11.31 after forecasting weak quarterly results.
Compaq Computer lost $2.94 to $63.56; Intel fell 63 cents to $80.25, and Sun Microsystems fell $1.31 to $35.69.
But Internet software maker RealNetworks soared $5.38 to $17.88 on its first day of trading.
* The Dow Jones utilities average, seen by some money managers as a proxy for the direction of interest rates, set a record for the first time since Sept. 13, 1993, indicating that some investors expect lower rates. The Dow utilities rose 1.23 points to 256.75, led by Columbia Gas System, up 69 cents to $72.38.
In commodities trading, silver jumped as speculators bet that strong demand and tight stocks would push prices higher.
Silver for December delivery rose 19 cents to $5.418 an ounce at New York’s Commodity Exchange, after hitting the highest level since March 14 during the session.
Overseas, Tokyo’s 225-share Nikkei average rose 413.09 points, or 2.5%, to 16,721.58. It rose 1,639.06 for the week.
Market Roundup, D6
