Nasdaq Hot Streak Continues

Personal computer stocks rallied Friday and some market measures set new highs as interest rates fell to the lowest level all year on more signs that inflationary pressures have ebbed.

The Dow Jones industrial average rose 35.06 to 7,921.82 after retreating from a 68-point gain that had put the blue-chip barometer within 45 points of the 8,000-mark.

The Dow gained 26.01 for the week, but finished about 40 points shy of Tuesday’s record close at 7,962.31.

The Nasdaq composite index broke above 1,500 for the first time, closing at a record high for the seventh straight session, a streak that’s added nearly 65 points, or 4.5 percent, to the technology-rich measure.

In another sign that inflationary pressures continue to ease, the Labor Department reported Friday morning that wholesale prices paid to factories and other producers fell for the sixth straight month in June, an unprecedented string in the 50 years the government has tracked those figures.

The data helped further justify the Federal Reserve’s decision last week not to guard against inflation by slowing the economy with a boost in short-term interest rates. In March, the Fed sparked worries about company profits by raising a key lending to slow the pace of borrowing and spending.

The report “continued the hope that the Fed won’t have to increase rates in August and not even in September,” said Jim Weiss, deputy chief investment officer for equities at State Street Research and Management Co. in Boston. “It continues the current trend of an economy that has slowed enough that we can have sustained, non-inflationary growth.”

Bonds, which pay a fixed dividend that’s more enticing when inflation is tame, rose on the wholesale prices report. As prices rose, the yields on the 30-year Treasury bond - a key influence on long-term borrowing costs, fell to 6.52 percent, the lowest level since December.

It was a light day for second-quarter earnings reports, but Chrysler continued the early trend of generally positive results. While it said profit fell 53 percent because of a strike, Chrysler met analyst expectations and its shares rose 1/2 to 35-3/8 in active trading on the New York Stock Exchange.

The big stars of the session were PC makers, which jumped amid enthusiasm over Thursday’s strong profit showing by Compaq Computer and “talk about a pickup in order activity in the fall,” said Weiss.

In NYSE trading, Compaq rose 3-3/4 to 123-7/8, and Hewlett-Packard rose 2-11/16 to 61 as the Dow’s biggest gainer. Dell Computer, meanwhile, soared 9-3/8 to 138 in active Nasdaq trading.

The S&P 500 rose 2.90 to 916.68, and the NYSE composite index rose 1.85 to 478.12, leaving both measures slightly shy of Tuesday’s record highs.

The Nasdaq composite index rose 11.69 to 1,502.62.

Overseas, Tokyo’s Nikkei stock average rose 0.6 percent, Frankfurt’s DAX index rose 1.2 percent and London’s FT-SE 100 rose 0.7 percent.