Stock Prices Fizzle; Yields Hit New Low

A huge gain by J.P. Morgan cushioned the Dow for now, but the monthlong slide from record highs reached 10% on Friday for the stock market’s other well-known barometer, the S&P; 500.

Meanwhile, long-term bond interest rates hit a record low and the dollar rose as investors sought safe havens amid worries about Russia, Asia and the White House sex scandal.

An early stock rally fizzled for the second straight day, with the Dow Jones industrial average surrendering a 97-point gain before finishing with a loss of 34.50 at 8,425.00, down 173.02 for the week.

It was the lowest close since late February for the Dow, which now sits about 913 points, or 9.8%, below the July 17 record of 9,337.97.

But while the equivalent of a 38-point gain by J.P. Morgan helped avert the Dow’s first 10% “correction” since last October’s sell-off, the Standard & Poor’s 500-stock list fell 12.16 points to 1,062.75 on Friday, finishing the week 10.4% below its mid-July peak.

J.P. Morgan rose $9.63 to close at $126.88 after Business Week reported that the Wall Street firm is discussing a merger with a major European bank.

Friday’s downturn came despite big rebounds in Hong Kong and Moscow stock exchanges after several days of steep declines spurred by the deepening economic crises in Asia and Russia. The sell-offs in those markets had served as key sparks in the Dow’s 258-point plunge during Tuesday’s session.

“What we have is a very weak market internally,” said Steven Goldman, market strategist at Weeden & Co. in Greenwich, Conn.

“Russia was up 15% and Hong Kong was up 8.5%. What happened? How come we didn’t rally?,” Goldman said.

He noted that the market drew little comfort from a new all-time low of 5.54% for the yield on the 30-year Treasury bond, from 5.64% Thursday. The yield is a key influence on borrowing rates. “We are not going to have any sustained rally in the next several months. We can’t even have a sustained rebound.”

Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange in fairly heavy trading.

The NYSE composite index fell 5.35 points to 535.71, and the Russell 2,000 index of smaller companies fell 1.04 points to 402.79.

The technology-heavy Nasdaq composite index fell 12.35 points to 1,790.19. The White House scandal takes a decisive turn Monday when President Clinton testifies in the grand jury probe, and the Federal Reserve Board’s Open Market Committee, which sets short-term interest rates, will meet Tuesday.

“With the testimony from President Clinton next week, as well as the Fed meeting and all the uncertainty coming out of Asia and Russia, the people who are sticking around on a Friday afternoon are those more likely to sell than buy,” Charles White, managing director of Avatar Associates, said.

Among Friday’s highlights:

* Driving Nasdaq lower was Tellabs, down $13.69 to $58.13, and merger partner Ciena, off $17.06 to $54.13, as the two most active issues after Ciena issued a profit warning and raised questions about Ciena’s pending $6.9-billion sale to Tellab.

The warning sent Lucent down $2.31 to $85.88 and Ascend Communications fell $2.19 to $46.19.

* Major chemical issues fell after DuPont’s warning this week of weak third-quarter earnings.

DuPont fell $1.75 to $53.25, Dow Chemical fell $4.63 to $85.50, Rohm & Haas dropped $4.50 to $90 and Lyondell slipped $1.88 to $22.94.

* Two companies that began trading were among the gainers. Global Crossing rose $6.50 to $25.50 as the company, which is laying fiber-optic cables under the Atlantic and Pacific oceans, on optimism for the telecommunications industry. The company began trading Friday on the Nasdaq stock market.

24/7 Media, another IPO, also did well, rising $6.25 to $20.25. The New York company runs advertising networks for independent Web sites that let advertisers place their ads on all of these sites through a single purchase.

Overseas, Hong Kong’s main stock index soared 8.5% after the government made a rare intervention to prop up the market, which had plunged 16% to a five-year low in the first two weeks of August.

Market Roundup, D4