Stocks Start 1998 With Slight Gain

Stocks rose modestly Friday in a fidgety start to the new year, with investors drawing little inspiration from an economic report that sent bond-market interest rates plunging to a 4-year low.

The Dow Jones industrial average rose 56.79 to 7,965.04 after posting a minuscule gain for most of the thinly traded session. For the week, the Dow gained 285.73 points, or 3.7 percent.

Most broad-market indicators were lower until the final hour despite a strong day in the bond market, where interest rates sank to the lowest level since late 1993 following a report on manufacturing that suggested continued economic growth with little inflation.

In the first major reading on December’s economic activity, a national association of factory executives reported that the manufacturing sector’s growth rate slowed in December. The report also showed that prices for factory supplies rose at a slower rate.

“The economy did grow, but a little less rapidly, and price pressures continue to recede, so you have to be happy,” said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.

Bond prices rose sharply after the report, pushing the yield on the 30-year Treasury down to 5.82 percent. The yield - a key determinant of borrowing costs for companies and consumers - hasn’t finished that low since October 1993.

But there was also some cause for pause in Friday’s manufacturing data, which revealed the first broad evidence that the economic crisis in Asia is taking a toll on U.S. exports and probably eroding company profits.

Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange, where volume totaled just 366.20 million shares as of 4 p.m., the first full-session tally of less than 400 million since Columbus Day.

The trading was heavy, however, among telephone companies following late Wednesday’s surprise ruling by a federal judge in Texas that the Telecommunications Act of 1996 unconstitutionally barred the regional Bell companies from providing long-distance and other services.

The Dow’s biggest decliner was AT&T, which slid 2-1/2 to 58-13/16 as the most active issue on the NYSE. Among other long-distance providers, WorldCom fell 5/16 to 29-15/16 and MCI Communications fell 1/8 to 42-11/16 in active Nasdaq trading. SBC Communications, the Baby Bell that sued to overturn the law, rose 1-11/16 to 74-15/16 on the NYSE.

The Standard & Poor’s 500-stock list rose 4.61 to 975.04, less than 9 points from record terrain; and the NYSE composite index rose 0.96 to 512.15, about 2 points shy of a new closing high.

The Nasdaq composite index rose 11.18 to 1,581.53, but the Russell 2000 index of smaller companies slipped 0.50 to 436.52, and the American Stock Exchange composite index fell 2.07 to 682.54.

Overseas, Frankfurt’s DAX index rose 1.5 percent and London’s FTSE 100 rose 1.1 percent. Japanese financial markets were closed for a holiday.