Dow Trips on Rate Worries; Nasdaq Gains

Stocks ended mixed Friday as the Dow Jones industrials neared another milestone and then spun downward, hammered by rising interest rates.

The Dow closed off 89.34 points, or 0.8%, at 10,789.04, thwarting the advance on its latest thousand-point milestone when it was 39 points away from 11,000.

Nonetheless, the Dow surged 10.3% in April, reaching new closing highs 14 times in the month. It was up 0.9% for the week.

In the broad market most indexes also fell Friday, but losers outnumbered winners by a modest 16 to 13 on the New York Stock Exchange. Winners actually had a slight edge on Nasdaq, and the tech-heavy Nasdaq composite rose 0.6% to 2,542.85. Trading was heavy.

The Dow, which rose as high as 10,961, began sinking as bond yields surged in response to the Commerce Department’s report that the economy grew at a strong 4.5% annual rate in the first quarter, far above expectations.

The yield on the benchmark 30-year U.S. Treasury bond soared to 5.66% from Thursday’s 5.52% as investors feared the economic strength might eventually reignite inflation--even though an inflation index in Friday’s report showed prices remain basically stable.

The T-bond yield now is the highest since April 1. A rise through 5.7% would put it back to levels not seen since last summer.

The Dow was down more than 223 points in afternoon trading before buyers jumped back in.

But analysts noted that selling was concentrated in blue chips, and that the rest of the market seemed far less fazed by higher yields.

Even so, for the week the S&P; was off 1.6% and the Nasdaq composite fell 1.9%. The Russell 2,000 index of smaller stocks added 0.3%.

Among Friday’s highlights:

* In the Dow, American Express slid $4.69 to $130.69 and J.P. Morgan fell $3.25 to $134.75 as financial shares were hit by higher rates.

* Profit-taking knocked some industrial stocks, including Alcoa, off $2.44 to $62.25, and Georgia-Pacific, off $2.19 to $92.50. But Dow Chemical gained $2.13 to $131.19 and Emerson Electric rose $2 to $64.50.

Deere fell $2.38 to $42.75 as the agricultural equipment maker said weak demand for farm machines will result in a 20% drop in second-quarter sales, more than estimated.

* Tech stocks rallied after three days of losses. Amazon.com gained $3.81 to $172.06, Apple jumped $3 to $46 and IBM rose $4.38 to $209.19.

InfoSpace.com jumped $24.69 to $143.31 as the Internet content provider said its first-quarter loss was 3 cents a share, narrower than the expected loss of 14 cents.

And Marimba, a supplier of technology that lets companies distribute and update software over the Net, rocketed $40.75 to $60.75 on its first trading day. Its ticker symbol: MRBA.

* Among Southland companies, Santa Ana’s Corinthian Colleges jumped $3.63 to $16.38 as the operator of vocational schools said quarterly profit from operations rose to 25 cents a share, beating the 14-cent average estimate of analysts.

Market Roundup, C4