Dow Recovers From Slump To Post Small Gain

Blue chip stocks bailed out of deeply negative territory on Friday to finish fractionally higher, while the broad market closed mixed one day after Wall Street’s worst stumble in six months.

Many traders dismissed the market’s behavior as the result of expiring options and futures contracts, which often injects volatility into prices and inflates the volume of trading.

If anything, they said, the so-called “double witching” expirations had a positive effect on stock prices. Nonetheless, it remains to be seen whether the Dow Jones average’s dramatic 81-point drop on Thursday will resume next week, further eroding gains from a prolonged bull market.

The Dow average rallied from a 29-point loss at midday to finish up 0.69 at 4,341.33. But the Dow transportation and utility indexes, which many market participants view as key barometers, both lost ground. The transports fell 13.28, or 0.81 percent, to 1,626.66, while the utilities edged 0.59 lower, or 0.30 percent, to 195.49.

The market started lower at the open in continuation of Thursday’s sell-off. But the selling quieted in the afternoon, and technology issues, a long-term market leader, improved.

Eugene Peroni, director of technical research at Janney Montgomery Scott Inc. in Philadelphia, said Thursday and Friday were temporary setbacks.

“A lot of stocks are well above even their normal short-term trends, and I think it’s going to persist a little bit, but there is some support at 4,310” on the Dow average, Peroni said.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

Caterpillar fell 1 1/8 to 59 3/4.

Georgia Pacific, down 3/4 at 77 1/2.

Cyclical stocks, those that respond sharply to changes in the economic outlook, were softer as some investors worried that the economy is slowing down enough to begin cutting into corporate earnings.

Johnson & Johnson rose 3/4 to 62 3/4.

Merck rose 3/4 to 42.

Pfizer rose 2 1/4 to 84 1/8.

Drug stocks recovered after a fall on Thursday, when Johnson & Johnson warned that analysts’ 1995 earnings estimates of $3.62 per share were “a little on the high side.”

Cabletron Systems rose 2 to 52 1/2.

Standard & Poor’s replaced Clark Equipment with Cabletron in its 500-stock index at the close of Friday’s trading.

NASDAQ

Bruno’s rose 1 to 11 1/2.

The company revised its takeover agreement with Kohlberg Kravis Roberts & Co. Under the revised plan, Bruno’s common shareholders would receive $12 a share, down from an originally planned $12.50, or they may retain that share as previously agreed to.

Netcom On-Line Communications fell 1 3/8 to 25 3/4.

The company priced 2.4 million shares at $26.25 late Thursday.

AMEX

Forest Labs rose 3/4 to 42.

The stock dropped 5 3/8 on Thursday, after the pharmaceutical maker said the U.S. Food and Drug Administration had not approved its Infasurf new drug application, saying it was the “same drug” as Abbott Laboratories’ Survanta product for respiratory distress in premature infants.