Stocks, Gold Post Big Gains

U.S. stocks rebounded in the final 90 minutes of trading Friday, wiping out earlier losses to finish the fifth winning week in the last six.

Gold prices rocketed, though analysts said the move was less a sign of inflation worries than the result of technical trading games.

On Wall Street, the Dow Jones industrial average closed up 53.16 points, or 0.5%, at 11,301.74, its highest since Sept. 6.

The Nasdaq composite inched up 5.20 points, or 0.2%, to 2,198.88.

Analysts were encouraged that the market continued to extend Wednesday’s big gains, when key indexes soared in a delayed reaction to the Federal Reserve’s half-point interest rate cut Tuesday.

Winners topped losers by 8 to 7 on the New York Stock Exchange and by 10 to 9 on Nasdaq.

For the week, the Dow rose 4.4%. Nasdaq climbed 4.3%.

Analysts said stocks’ continuing strength reflects investors’ trust that the Fed’s aggressive credit-easing campaign will fuel a turnaround in corporate profits by year-end. “You have to be looking for places to buy as opposed to places to sell” in this market, said James Grefenstette, a money manager at Federated Investors in Pittsburgh.

The Dow has risen 20% since March 22; Nasdaq is up 34% since April 4.

Stocks rose this week despite trouble in the bond market, where long-term yields have risen even as the Fed cut short-term rates.

The 10-year Treasury note ended unchanged Friday at 5.40%. It jumped to a five-month high of 5.50% on Tuesday in the wake of the Fed’s cut. Bond investors are worried that the Fed is pulling out all stops to revive the economy--even at the risk of sparking higher inflation in 2002.

The gold market also appears to be reflecting inflation concerns: June gold futures in New York zoomed $13.80 to $287.80 an ounce Friday, the highest since last June. For the week, gold rose 7.3%.

But analysts said gold is gaining for mostly technical reasons.

Speculators who had “shorted” gold, betting on lower prices, now are rushing to buy the metal to close out their positions.

“It is the speculators who sold gold short who are mainly covering to minimize losses,” said Heinz Thoma, analyst at Global Strategic Management in Annapolis, Md.

In other trading, crude oil jumped, with near-term futures rising $1 to $29.91 a barrel in New York, the highest since February.

That helped lift many energy shares, which paced Friday’s equity market gains. Exxon Mobil rose $1.47 to $90.20, Amerada Hess gained $1.64 to $89.90, and El Paso Corp. surged $3.24 to $65.

Among Friday’s highlights:

* Blue-chip winners included GE, up 88 cents to $52.99, and United Technologies, up $2.56 to $87.21.

* Many tech issues struggled. Agilent lost $2.72 to $36. The test-and measurement-equipment maker reported second-quarter profit that fell short of forecasts.

Palm sank $2 to $5.05 after slashing its sales outlook. The firm said it hired a broker to sell all or part of its land in San Jose, where it had planned to build its headquarters. At the height of the tech boom last year, Palm bought 39 acres from former parent 3Com for about $225 million.

* Krispy Kreme surged $4.47 to $63.85 after the company said it will split its stock 2 for 1.

Market Roundup: C4