Blue chip stocks rose to record highs Friday as bond market interest rates fell on fresh evidence of slow, noninflationary economic growth. But weakness among technology shares dampened gains in the broader market.
The Dow Jones industrial average added 14.23 to close at 6,560.91, topping its previous high of 6,547.79 on Nov. 25. The Dow gained 76.51 for the week.
The Dow opened higher as bonds rallied, but the blue-chip indicator gave back half of its 22-point gain in late-morning profit-taking before recovering in the afternoon.
The stock market is enjoying a yearend rally prompted by investors who want to buy shares that have performed well this year. That explains the overperformance this week of large-company stocks over smaller ones, said Jim Weiss, senior portfolio manager at State Street investments in Boston.
Friday’s volume was light, with 252.47 million shares changing hands on the the New York Stock Exchange as of 4 p.m. With so many investors absent following the Christmas holiday, Friday’s rise may have less conviction than market bulls would wish.
“It’s just hard to draw any conclusions from this session,” Weiss said.
Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, was more optimistic, noting the gains in the bond market, where prices on 30-year Treasuries rose more than $5 for each $1,000 invested and yields fell to 6.53 percent from 6.58 percent late Thursday. Bond prices and yields move in opposite directions.
“Right now, the path of least resistance is higher, and that trend should hold through next week,” Berman said.
On Friday, advancing issues led decliners by 7 to 4 on the NYSE. Broad-market indexes ended narrowly mixed amid softness in computer-related shares. The Nasdaq composite fell 3.19 to 1,291.38. And the American Stock Exchange’s market value index fell 0.90 to 581.93.
But the Standard & Poor’s 500 list rose 0.97 at 756.79, and the NYSE composite index added 1.03 to 398.10.
Bonds rose after the Commerce Department said orders to U.S. factories for durable goods unexpectedly fell 1.6 percent in November. That was the first decline in three months and was due largely to shrinking demand for electronic equipment.
Lower factory orders are welcomed by the financial markets because they suggest that the economy is not growing at an inflationary pace and that the Federal Reserve is less likely to raise interest rates to cool inflation.
But reinforcing the opposite notion that the economy is still growing, the Labor Department reported that new claims for jobless benefits fell by 15,000 last week to 335,000. Many analysts had expected a 5,000 decline.
In foreign stock markets, the Nikkei index in Tokyo rose 0.40 percent, the DAX index in Frankfurt added 0.26 percent, but the FT-SE 100 index in London eased 0.04 percent.
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