The stock market calmed down on Friday as investors apparently backed off their fears that industrialized nations were sitting on their hands instead of addressing global economic issues.
After Thursday’s sharp drop, the Dow Jones industrial average rose 21.89 Friday to close at 7895.66. The Dow never rose more than 57 points during the day, nor fell more than 46.
The session was in sharp contrast to Thursday’s 216-point drop in the Dow, which was interpreted as investor disappointment that the Federal Reserve Board and central banks of other industrial nations weren’t coordinating a more aggressive response to global economic problems. Investors particularly reacted to Fed Chairman Alan Greenspan’s statement that the central banks had no plans to lower interest rates.
For the week, the Dow was up 100.16. But the barometer of 30 big companies still was 15.4 percent below its July 17 record of 9337.97 and 12 points below where it began this year.
Volume was heavy–almost 913 million shares–but much of that was attributed to the “triple-witching” expiration of stock-related options and futures contracts.
Broader stock indicators also showed modest gains–“modest” being the key word. Investors skittish about falling stock prices continued to show favor to U.S. bonds, which rose Friday for the third straight day and the seventh straight week.
The 30-year bond rose0.59, or $5.94 per $1,000 bond, pushing the yield down 4 basis points to 5.14 percent, a new record low. Yields on two-year notes, the most actively traded Treasuries, fell 5 basis points to 4.61 percent. Ten-year yields, a benchmark for mortgage rates, fell 9 basis points to 4.68 percent, a three-decade low.
Among broader stock indexes, the Standard & Poor’s 500 closed at 1020.09, up 1.22 for the day and 11.03 for the week, while the technology-heavy Nasdaq composite index ended Friday at 1663.77, up 17.52 for the day and 22.13 for the week.
The American Stock Exchange, dominated by small companies, closed at 627.16, up 5.91 for the day and 13.95 for the week.
But small gains in three critical markets–Japan, Brazil and Mexico–helped U.S. stocks rebound.
In Japan, stocks rose 0.9 percent from Thursday’s 12-year low amid hopes that legislators would reach a compromise on banking reform in time for Prime Minister Keizo Obuchi’s visit to the United States next week. After the Tokyo market closed, an agreement was announced between the ruling Liberal Democratic Party and the main opposition parties.
But stocks fell elsewhere in Asia and in London and Frankfurt.
Among local companies, Brunswick rose 6 cents on the New York Stock Exchange to $12.87 amid signs the company’s largest single shareholder, Pioneering Management Corp. of Boston, may have sold its entire stake.
A block of 9,083,200 shares traded earlier Friday at $12.25 a share. Pioneering Management declined to comment.
USG Corp. rose $2.12 on the NYSE to $47.25. The company said it plans to spend $225 million to build new production lines for Sheetrock-brand gypsum wallboard in California and Oregon.
