Stocks Down; S&P; Sees 1% January Gain
Stocks pulled back Friday amid some mild profit-taking on a three-day rally that put the market back within reach of 8,000 points for the first time since early December.
Bond yields also fell and the dollar ended a volatile session higher against the yen amid concern that the Asian economic slowdown could spill over into Europe.
The Dow Jones industrial average fell 66.52 points to 7,906.50, trimming the week’s gain to 205.76 and leaving the blue-chip barometer with a microscopic loss of 1.75 points for the first month of 1998.
Broad-market indexes also finished lower Friday after a brief foray into record terrain by the Standard & Poor’s 500, which on Thursday closed at a new high for the first time since Dec. 5.
“After enjoying several days of healthy gains, investors have decided to be cautious and take some profits going into the weekend,” said Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis. “They’re worried that the Asian situation is quite uncertain and that there could be further revelations about President Clinton’s predicament.”
In a bullish sign for some stock watchers, the S&P; 500 rose about 10 points, or 1%, in January. Under the so-called “January barometer,” if the S&P; 500 finishes the month higher, it will end the year higher, and vice versa.
The markets have been bolstered in recent days by some robust reports on fourth-quarter profits, a lessening sense of alarm about the crises in Asia and Washington, and Federal Reserve Board Chairman Alan Greenspan’s appearance Thursday before a Senate panel.
Stocks opened lower Friday but began to recover as Greenspan and Treasury Secretary Robert E. Rubin, addressing a House panel, offered another generally upbeat prognosis of the economic crisis in Asia.
Also helping ease some of the worry about Asia was a report showing the U.S. economy expanded at full throttle during the last three months of 1997, punctuating a remarkable year that saw the strongest growth in nearly a decade and the mildest inflation since the mid-1960s.
The Commerce Department said the nation’s gross domestic product grew 4.3% in the fourth quarter, significantly better than most economists had predicted, while inflation ran at a scant 1.5% rate during the period, slightly lower than expected.
The news had a mild impact on the bond market.
The yield on the benchmark 30-year Treasury bond fell to 5.79% from 5.84%.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume totaled 613.38 million shares--heavy, but off sharply from Thursday’s blistering pace, which saw 754.46 million shares change hands, the fourth-biggest tally ever.
The S&P; 500-stock list fell 5.21 points to 980.28, leaving it with a gain of about 10 points for the new year. Similarly, the Nasdaq composite index slipped just 0.13 point to 1,619.36.
The NYSE composite index fell 2.50 points to 510.63 and the Russell 2,000 index of smaller companies fell 1.94 points to 430.05.
Among Friday’s highlights:
* The Dow’s biggest decliners were J.P. Morgan, down $2.25 to $101.19; General Motors, down $2.19 to $57.94; and Chevron, down $2.19 to $74.75.
* Computer disk drive makers gained as investors concluded that they already reflect the worst possible news.