Dow Rises as Interest-Rate Worries Lessen
Stocks jumped back toward record levels Friday as a second straight day of favorable economic data provided further tonic for the market’s sudden bout with interest rate jitters.
The Dow Jones industrial average rose 83.70 points to 9,147.07, up 82.45 points for the week and less than 40 points shy of the April 21 closing record of 9,184.94.
Broader indexes also extended Thursday’s rally as a series of reports, including the first broad reading on April’s business conditions, reinforced arguments that economic activity isn’t accelerating at an inflationary pace.
The Nasdaq index was up 5.03 points at 1,873.44.
Only days earlier, on Monday, stocks tumbled amid reports that the Federal Reserve might raise its key lending rates to prevent an inflationary spurt.
“The recent data should help stay the Fed’s hand,” said Jeffrey Applegate, chief investment strategist at Lehman Bros. He pointed to next Friday’s report on April employment as the next major hurdle, but said it’s unlikely that Fed officials will raise rates at their May 19 meeting.
The 30-year Treasury bond rose .25 point, or $2.50 on a $1,000 bond, lowering the yield to 5.93% from 5.94% at Thursday’s close. The yield and price move in opposite directions.
Shares of oil companies rose after oil prices gained 74 cents to $16.13 a barrel on the New York Mercantile Exchange on renewed speculation that members of the Organization of Petroleum Exporting Countries were considering extra production cuts to boost prices.
Chevron gained $3.69 to $86.38, and Exxon gained $2.38 to $75.31.
Bank and financial stocks continued to gain, cheered by the prospect of steady interest rates in the near term. American Express rose $3.50 to $105.50, and J.P. Morgan gained $3.88 to $135.13.
Merger rumors also drove banking stocks up.
Fleet Financial Group Inc. rose $3.31 to $89.69 and BankBoston gained $2.34 to $110.88 on a Boston Globe report that they had discussed the possibility of a merger this week. The companies both declined to comment.
Mellon Bank fell 0.88 cents to 71.13 after Bruyette & Woods analyst David Berry, citing a meeting he had with Bank of New York Chairman Thomas Renyi, said Bank of New York will likely drop its $22-billion takeover bid for Mellon in a few weeks. Bank of New York rose $1.94 to $61.
The Standard & Poor’s 500-stock list rose 9.25 points to 1,121, the NYSE composite index rose 4.54 points to 581.91, and the Nasdaq composite index rose 5.03 points to 1,873.44
The Russell 2,000 index of smaller companies rose 2.05% to 484.94, and the American Stock Exchange composite index rose 3.34 points to 749.86.
Overseas, Tokyo’s Nikkei stock average fell 0.3%, and London’s FTSE-100 rose 1.4%. German markets were closed for a holiday.
Among Friday’s market highlights:
* Merck, a Dow component, tumbled $4.13 to $116.38 after the company said it was offering to sell its Zocor anti-cholesterol drug to U.S. hospitals for pennies a day, a sharp discount to the normal wholesale price, which ranges from $1.88 to $3.40 a daily tablet.
* Electronic Data Systems’ shares fell 10% amid concern that discounts being offered to General Motors, its biggest customer and former parent, will cut into profit through the first half. EDS fell $4.25 to $38.75.
* Boeing rose $1.69 to $51.75. The company Thursday won a contract valued at about $1.6 billion to start managing a continental U.S. missile defense system, said industry and government officials familiar with the situation.
* Compaq Computer rose $1.44 to $29.50 as the computer maker’s Mexican unit said first-quarter sales of personal computers and related services rose 42% on strong consumer demand.
* K-Tel International jumped $10.47 to $48. The online and television music retailer was reiterated a “strong buy” by Stock Investor Trading News.
Market Roundup, D4
