August Data Send Stocks, Bonds Higher
Stocks and bonds rallied Friday, with the Nasdaq index of high-technology and smaller stocks rising to a record, as Wall Street cheered favorable economic news.
The Dow Jones industrial average rose 81.99 points to 7,742.97, breaking a string of lower closes for the last eight Fridays. But for the week, the index was off 79.44 points.
Broad-market indicators also pushed higher after surrendering their early gains. The Russell 2,000 index of smaller-company stocks closed at a record high for the 10th time in 13 sessions, ending a two-day losing streak.
Stocks drew an early boost from the bond market, where interest rates fell sharply after the release of two reports restoring some faith in the outlook for steady economic growth with low inflation.
The data also helped offset any potential aftershocks from late Thursday’s profit warning by Motorola, which said it wouldn’t meet Wall Street forecasts for the third quarter.
And having grown increasingly leery about the blue-chip sector after a month of stumbles and abortive rebounds, investors used the early strength to take some money out of the market.
“We’ve had some mild acrophobia among the buyers,” said Richard A. Dickson, a technical analyst at Scott & Stringfellow in Richmond, Va.
“It may have something to do with the psychology that’s been rampant in the market--that we’re in the middle of a correction, and it’s time to sell on the bounces. But that sentiment ran out of steam [on Friday],” particularly as bonds continued to strengthen, Dickson said.
Bonds rallied, sending interest rates tumbling, after the Labor Department reported that wholesale prices paid to factories and other producers rose just 0.3% in August. And even with the increase, the first monthly rise since December, wholesale prices have fallen this year at an annual rate of 2.2%.
The 30-year Treasury jumped, lowering its yield to 6.58% from 6.69% Thursday. Bond prices and yields move in opposite directions.
The Commerce Department, meanwhile, reported that retail sales rose 0.4% in August, below analyst expectations.
The data came amid renewed uncertainty over whether the economic pace is vigorous enough to keep profits growing, but modest enough to keep inflationary pressures in check without a boost in interest rates by the Federal Reserve Board.
Advancing issues outnumbered decliners by more than a 5-to-2 margin on the New York Stock Exchange. Trading was heavy.
The Standard & Poor’s 500-stock list rose 11.32 points to 923.91, the NYSE composite index rose 6.24 points to 483.30, and the Nasdaq composite index rose 9.47 points to 1,649.33.
The Russell 2,000 rose 4.16 points to 440.09.
Among Friday’s highlights:
* Advancing Dow components included Procter & Gamble, up $2 to $133.50; 3M, up $1.69 to $91.75; Chevron, up $1.56 to $82.38; and Sears, up $1.50 to $57.25.
* Motorola rose $3.31 to $69.19 as the most active NYSE issue after plunging more than $8 in late trading on Thursday, when the company warned that its results will be hurt by slow pager sales and a decision to stop making Macintosh clones.
In currency trading, the dollar jumped against the Japanese yen but fell against the mark on German interest rate-hike rumors.
The dollar rose to 120.96 yen, up from 119.55 yen Thursday. It fell to 1.7715 marks from 1.7790 marks.
Market Roundup, D4
