Record Highs Cap an Exceptionally Strong Week on Wall Street

Stocks rose to new records Friday as a strong employment report fed investors’ enthusiasm and capped a week of extraordinary strength on Wall Street.

The Dow Jones industrial average rose 72.82 points to close at 11,139.24, topping its previous record close of 11,107.19, set May 13.

Bond yields held steady despite the employment news, providing support for stocks. For the week, yields ended lower, thanks to the Federal Reserve’s surprise decision on Wednesday to shift to a “neutral” stance on interest rates.

“We got exactly what we were hoping for out of the Fed on Wednesday, and this morning’s data didn’t deter us from a summer rally,” said Philip Orlando, chief investment officer for Value Line Asset Management. “Anyone predicting a summer correction is looking for another job.”

All three major stock indexes hit record highs on Friday, and all three recorded their biggest weekly point gains ever.

The Dow gained 586.68 points, or 5.6% for the week. The Standard & Poor’s 500, up 0.7% on Friday, gained 75.91 points, or 5.8%, on the week, while the Nasdaq composite leaped 1.3% Friday and 188.37 points, or 7.4%, for the week.

In percentage terms, it was Nasdaq’s seventh-biggest gain ever, though it wasn’t in the top 10 for the Dow or the S&P; 500.

Stocks climbed Friday as the Labor Department said American businesses created 268,000 new jobs in June, with all industries except manufacturing and mining posting solid gains. The rise was slightly stronger than economists expected, and average hourly earnings increased by 3.7% in June compared with a year ago.

Higher wages normally raise inflation worries, hurting bonds. But yields barely budged on Friday in a shortened pre-holiday session.

The 30-year Treasury bond yield held steady at 6%. The yield was down from 6.15% a week earlier.

Still, some bond traders warned that more signs of economic strength could force the Fed to change its mind about rates this summer, and add on to Wednesday’s quarter-point increase in the federal funds rate, to 5%.

For now, however, the optimists are firmly in control on Wall Street.

“This is good news for the stock market--we have low unemployment” without a significant inflation threat, said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter & Co.

Winners topped losers by 17 to 12 on the New York Stock Exchange and by 23 to 16 on Nasdaq on Friday.

U.S. markets will be closed Monday in observance of Independence Day.

Among Friday’s highlights:

* Retail stocks paced the market on optimism about consumer spending. May Department Stores rose $1.13 to $42.63, Wal-Mart gained $1 to $48.75 and Circuit City jumped $4.13 to $99.

* Many financial stocks were strong. American Express leaped $4.50 to $137.63, Merrill Lynch rose $1.19 to $79.69 and Golden West gained $1.31 to $99.19.

* Tech stock winners included Apple, up $1 to $46.31; Cisco Systems, up $2.69 to $67.06; Qualcomm, up $4.50 to $144.25; and Priceline.com, up $4 to $111.50.

* Mirage Resorts dropped $1.50 to $15.25 as the Las Vegas-based casino hotel company warned it expects second-quarter earnings of 7 to 10 cents a share, below analysts’ estimates and year-ago levels.

* Among Southland issues, GoTo.com extended its tear by leaping $13.94 to $50.44 as Netscape Communications said it will include a link to the Pasadena company’s Web site in an upgraded version of its search service.

Day Runner tumbled $2.63 to $10 after the Irvine maker of paper organizers said it expects to lose money in its fiscal fourth quarter, and may put itself up for sale.

Market Roundup, C4

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Weekly Winners

Among the stocks hitting new highs this week on the New York Stock Exchange:

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Company Friday close 1-week % change Best Buy $73.00 +15.1% MBNA 31.94 +14.1 Tiffany 97.25 +12.0 Nokia 94.56 +10.9 Univision 66.00 +10.9 Motorola 98.31 +9.2 Tyco Intl. 98.75 +8.5 Sony 112.75 +8.2 IBM 132.25 +7.4 W.R. Grace 19.38 +7.3

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Sources: Times research, Bloomberg News

IPO Tally

Initial public offerings raised a near-record $24.8 billion nationwide in the year’s first half, according to Thomson Financial Securities Data. The 225 deals were nowhere near the high mark set in 1996’s first half, however. Half year volume and deal number totals since 1989:

Proceeds

First-half 1999: $24.8 billion

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Number of deals

First-half 1999: 225

Source: Thomson Financial Securities Data

COMING MONDAY: California Dealin’ features a special midyear report on the state’s IPO market.