Inflation Fears Snap Dow’s Five-Day Streak

Stocks tumbled from record heights Friday and long-term bond prices retreated as a run-up in gold prices to levels last seen in 1990 stirred fears of inflation.

The Dow Jones industrial average fell 31.07 to 5,373.99, reversing direction after five consecutive days of all-time highs. On Thursday, the Dow index rose 9.76 to a record 5,405.06.

On Friday, decliners led advancers by about 6 to 5 on the New York Stock Exchange. Big Board volume was moderately heavy at 418.18 million shares but below Thursday’s pace.

Stocks kept the losses to a minimum for most of the day, but lost ground in a big downdraft in bonds in the final hour.

“The bond market pulled back very quickly in the last hour,” said Leon Brand, a global market specialist at NatWest Securities, “some on worries about inflation, some on supply, and the fact that there was no progress in Washington on the budget talks. As soon as that came in, people started taking profits in the stock market.”

The 30-year Treasury bond fell 1-11/32 point, pushing its yield up to 6.16 percent.

Spot gold closed up $4.10 at $415.20 an ounce, a six-year high, in heavy New York trading.

Some of the stocks that moved substantially Friday:

NYSE

Mattel rose 1-1/8 to 33-5/8.

The nation’s biggest toymaker withdrew its $5 billion offer for No. 2 Hasbro Inc., which had opposed the merger claiming a combination would be rejected on antitrust grounds. Mattel said it disagreed with Hasbro’s antitrust objections, but said Hasbro’s “scorched earth campaign” had foreclosed a merger.

W.R. Grace & Co. rose 7-3/8 to 69-1/4.

Baxter International fell 2-1/2 to 42-1/2.

Baxter said it offered $3.8 billion in cash, stock and other securities for W.R. Grace & Co.’s National Medical Care subsidiary, the world’s largest operator of kidney dialysis centers.

Barrick Gold rose 5/8 to 31-1/2.

Homestake Mining rose to 20.

Newmont Mining rose 1 to 59-1/8.

Gold stocks rose with gold prices. Spot gold closed $4.10 higher at $415.20 an ounce in heavy New York trading, its highest closing level since Feb. 20, 1990.

NASDAQ

Apple Computer rose 7/8 to 29-1/4.

National Semiconductor fell 1/8 to 17-5/8.

Sun Microsystems rose 1-1/2 to 47-3/8.

Apple shares rose following reports that Michael Spindler, the embattled chief executive officer, has been ousted by the company’s directors. Spindler reportedly will be replaced by Gilbert Amelio, an Apple board member and CEO of National Semiconductor Corp., which confirmed that Amelio had resigned. Meanwhile, investors awaited more news about merger talks between Apple and Sun Microsystems.

Iomega Corp. fell 2-3/8 to 13.

The Roy, Utah, company, which makes and markets data storage solutions, put on hold its planned offering of 5.25 million common shares, citing confusion in the marketplace and the volatility of its stock price.

AMEX

Hasbro fell 6-1/8 to 34-5/8.

Toymaker Mattel withdrew its $5 billion offer for No. 2 rival Hasbro.