Bargain-hunters helped snap a three-day losing streak on Wall Street in the final hour of trading Friday, reversing a decline that briefly sent the Dow industrials tumbling more than 127 points.
The dollar rose to another eight-year high against the yen after Japan said its economy shrank in the first quarter, plunging the world's No. 2 economy into recession for the first time in 23 years. RELATED STORY: A1
The Dow Jones industrial average rose 23.17 points, 0.3%, to 8,834.94 after an early sell-off pulled the index down 128 points. For the week, the Dow lost 202.77 points, or 2.2%.
With Friday's solid rebound, which left broader indicators mixed, the outlook was brighter for next week.
"If we were down at the end of the day, Monday could have been a lot uglier," said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co. "But we could be turning. And with bonds at new highs, stocks should probably follow along" on Monday.
The turnaround was fueled by computer-driven "buy" programs, and traders trying to square their books ahead of the weekend.
Wall Street was in a bearish mood from the opening on speculation that the Asian economic crisis may have more of a negative effect on the U.S. economy and corporate profits than previously thought.
Fanning the bearishness was news that Japan's economy had contracted for two consecutive quarters, confirming that the country had slipped into recession.
The market ignored news of a slightly higher-than-expected 0.2% rise in the May producer price index.
The yield on the 30-year Treasury bond rose slightly to 5.66%, from its lowest-ever close of 5.65% on Thursday.
Seventeen of the 30 Dow industrial stocks gained ground, led by Chevron, up $3.31 to $81.38, and United Technologies, up $2.06 at $86.94.
Despite the Dow's gain, there was still carnage in the broad market. Declining issues outnumbered advancers by about 12 to 7 in heavy trading on the New York Stock Exchange.
The Standard & Poor's 500 index was up 4.26 points, or 0.4%, at 1,098.84, and the technology-heavy Nasdaq composite index was down 4.70 points, 0.3%, at 1,745.05.
The NYSE composite index rose 1.17 points to 566.67. The Russell 2,000 index of smaller companies fell 2.79 points at 441.55.
Among Friday's highlights:
* Big banks that do a lot of business in Asia slumped. Chase Manhattan fell 50 cents to $138.56, and BankAmerica lost $1.81 to $85.63.
* Brunswick was down $3.63 to $25.19 after reporting that lower-than-expected sales will cause second-quarter earnings to fall below estimates. Economic turmoil in Asia is making it hard for customers to secure credit to buy bowling equipment in China, where the industry is hoping to expand, Brunswick said.
* Makers of equipment used to produce semiconductors were hit especially hard by weak Asian demand. ASM Lithography Holding plunged $5.19 to $29.13 after the world's No. 2 chip-making equipment company said canceled orders from Taiwan will hurt profit for the rest of 1998.
ASM's slide took down other chip-equipment companies. KLA-Tencor lost $2.19 to $24.94, a 52-week low, although the No. 1 company, Applied Materials, rose 45 cents to $28.70.
* Oil stocks reversed their recent losses. Besides Chevron, Exxon gained $1.25 to $69.31 and Atlantic Richfield added $1.56 to $78.31. The stocks were hit earlier in the week when oil dropped below $13 a barrel, but some investors believe crude prices are near a bottom.
Market Roundup, D4