Stocks Climb as the Dollar Gains Ground
Stocks rose Friday as the dollar showed renewed signs of strength against the Japanese yen. As the U.S. currency extended its recovery from Wednesday’s 3 1/2-year low, it boosted the bond market, which enticed investors back into bank and brokerage stocks.
The Dow Jones industrial average gained 66.17 points, or 0.6%, to close at 10,803.63, erasing its 63-point loss on Thursday. For the week, however, the index tumbled 2%.
Broader stock indicators also rallied Friday.
The Standard & Poor’s 500 index gained 16.94, or 1.3%, to 1,335.42; the technology-oriented Nasdaq composite soared 62.90 points, or 2.2%, to 2,869.62; and the Russell 2,000 index of smaller companies rose 4.20 points, or 1%, to 434.45.
Four stocks rose for every three that fell on the New York Stock Exchange.
For the week, the S&P; 500 slid 1.2% and the Nasdaq 0.6%.
Friday’s bond rally was powered by optimism that the Fed won’t raise interest rates at its Oct. 5 policy meeting. The benchmark 30-year Treasury yield fell to 6.04%, from 6.07% the day before.
“The improvement in the bond market helped everything that depends on interest rates,” said Barry Hyman, senior analyst at Ehrenkrantz King Nussbaum.
Rallying financial stocks included American Express, up $3.38 to $139.88; Morgan Stanley Dean Witter, up $4.31 to $91.44; Capital One Financial, up $1.13 to $38.31; and Merrill Lynch, up $1.38 to $71.94.
The dollar’s strength also benefited the sector. The currency soared to 106.86 yen, from 105.19 the day before.
In commodity trading, oil prices continued higher, as crude for October delivery gained 21 cents to $24.72 a barrel, fueled by confidence that global exporters will keep supply restraints in place.
Among the equity highlights:
* Adobe Systems soared $7.13 to $105 after reporting that quarterly earnings rose to 88 cents a share, beating the 74-cent average estimate of analysts. The company will split its stock 2 for 1 on Oct. 26 for shareholders of record Oct. 4.
Other computer-related companies rose on optimism for brisk earnings growth, including Intel, up $2 to $84.63, and Sun Microsystems, up $4 to $88.69. Sun announced a 2-for-1 stock split on or about Dec. 7 for holders of record Nov. 11.
But America Online continued its slide, slumping $1.56 to $86 after being downgraded to “neutral” from “neutral plus” by an analyst at New Japan Securities.
* Among Southern California companies, Conexant Systems of Newport Beach vaulted $5.44 to $79.19 after being raised to “recommend list” by Goldman Sachs analysts.
Vitesse Semiconductor of Camarillo jumped $5.94 to $92.94 after being rated “market outperform” in new Goldman coverage.
Qualcomm of San Diego surged $10.06 to $189.94 after being reiterated “buy” at A.G. Edwards.
* In its trading debut, Mountain View, Calif.-based Vitria Technology (ticker symbol: VITR), whose software helps businesses exchange information over the Internet, rocketed $32.25 to $48.25.
Market Roundup, C4
