More bargain-hunting in small company and technology issues lifted Nasdaq stocks Friday, but most of the market was held back by uncertainty ahead of next week's raft of economic news.
The Dow Jones average of 30 industrial stocks, which spent the morning in positive territory, fell during the afternoon to finish down 22.90 at 5,654.63.Led by another rally in depressed computer-related stocks and another sharp drop in long-term interest rates in the bond market, broader market indicators held their gains through the session.
Every day of the coming week - from a Federal Reserve interest-rate meeting through unemployment figures on Friday - brings economic news that could shift the market.
Advancers led decliners by better than a 5-to-2 margin on the New York Stock Exchange, and the Nasdaq market rallied for the second straight session as investors took advantage of a two-week, 7.7 percent slide on worries about poor profits in the computer industry.
The yield on the 30-year Treasury bond - a key determinant of corporate and consumer borrowing costs - fell to 6.89 percent, down from 6.99 percent late Thurs-day. Two weeks ago, the yield surged to nearly 7.20 percent amid growing fears of higher inflation, which makes bonds and their fixed rate of return less enticing.
"There's a lot of sweat off people's brow" now that the long-bond yield is below 7 percent, said Chris Dickerson, a market analyst at Global Market Strategists in Gaines-ville, Ga. "But there is that huge caveat moving over the market, known as the monthly employment report. Certainly that's going to put a crimp into things until next week."
Although recent readings on inflation have been tame, signs of strong employment and wage growth have spurred big sell-offs during the late winter and spring. Analyst have been worried that a rapid increase in spending power will generate too much demand, accelerating inflation.
But even before the report on June employment comes out, there will be new inflation numbers and a key Federal Reserve meeting on interest rates.
The Fed's policy-makers will decide whether to raise interest rates as a pre-emptive strike against inflation. Higher interest rates can hurt corporate profits by raising borrowing costs and slowing consumer spending.
NYSE volume totaled 462.22 million shares as of 4 p.m., up sharply compared with the rest of the week, as money managers worked to give their portfolios a quarter-ending glint.
The NYSE's composite index rose 1.62 to 359.20, and the Standard & Poor's 500-stock index rose 2.08 to 670.63.
The gains were more pronounced in the more speculative sectors of the market. The Nasdaq composite index jumped 19.01 to 1,185.02, and the American Stock Exchange's market value index rose 6.66 to 576.79.
Among the Nasdaq's bellwethers, Cisco Systems rose 13/4 to 565/8; Dell Computer rose 23/8 to 507/8; and Sun Microsystems rose 1 3/16 to 587/8. But Intel slipped 7/16 to 73 7/16, and Microsoft rose just 3/16 to 1201/8.
Utility stocks were among the day's best performers, with their high dividends looking more appealing as bond yields fell. The Dow Jones transportation index rose more than 2 percent.
Among the big decliners in the Dow industrial average, Boeing fell 25/8 to 871/8 and Texaco fell 11/4 to 837/8.
Overseas, Tokyo's Nikkei stock average rose 0.1 percent, Frankfurt's DAX index rose 0.4 percent and London's FT-SE 100 rose 0.9 percent.