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Spokane, Washington  Est. May 19, 1883

Yo-Yoing Market Won’t Rattle Fed

Associated Press

Completing a week of daily 100-point swings in the Dow industrials, stocks yo-yoed anew Friday, jolting to near-record territory before retreating to post modest gains.

The Dow Jones industrial average followed bonds for an early jump that appeared on pace to challenge its record close of 7,796.51 last Friday.

But investors grew cautious in afternoon trading, eliminating most of the blue chip barometer’s 116.48-point peak gain for the day.

The Dow closed up 33.47 at 7,687.72. The week started with a nearly 200-point drop, with stocks taking wide swings each day thereafter.

Friday’s afternoon retreat came amid slower trading that followed the weekend exodus of traders, increasing the market’s volatility. The instability was also affected by investors’ end-of-quarter portfolio adjustments, analysts said.

The higher stock prices followed signs that the economy is slowing its brisk first-quarter pace. The moderation appears just in time to dissuade the Federal Reserve from raising interest rates to cool inflation at its meeting Tuesday and Wednesday, as it did in March but declined to do in May.

With little time left before the Fed meets, investors have grown bold, said Alan Ackerman, executive vice president at Fahnestock & Co.

“We’ve had a series of nervous new highs and much of the nervousness is over what the Fed might do,” Ackerman said. “It certainly appears there’s not enough inflation data to rattle the Fed’s cage.”

The Commerce Department announced Friday that the economy expanded at a 5.9 percent seasonally adjusted annual rate in the first three months of the year, the best rate since 1987.

But economists expect growth well below that rate in the quarter that ends Monday as consumers ease off their spending pace.

Advancing issues outnumbered decliners by a 13-to-7 margin on the New York Stock Exchange, where volume came to 469.73 million shares, down from Thursday’s pace.

Leading Dow gainers were Caterpillar, up 2-3/8 at 108, and Procter & Gamble, up 2-13/16 at 139-5/16.

Broad-market indexes were also higher.

The Standard & Poor’s 500 list closed up 3.62 at 887.30.

The NYSE composite index was up 2.37 at 463.30 and the American Stock Exchange composite index was up 3.97 at 620.07.

The technology-heavy Nasdaq composite index was up 1.77 at 1,438.15.

Overseas, Tokyo’s Nikkei stock average closed down 0.5 percent. Frankfurt’s DAX index was little changed and London’s FT-SE 100 was down 0.4 percent.