Dow Ends Bumpy Week With Gain

Sat., May 29, 1999

Stocks finished a turbulent week with solid gains Friday as new data showing slower-than-expected economic growth helped calm fears about rising inflation and higher interest rates.

Investors also jumped at the chance to pick up shares at cheaper prices as a result of Wall Street’s slump this week.

After tumbling 235 points Thursday, its worst drop in eight months, the Dow Jones industrial average rose 92.81 points Friday, or by 0.9 percent, to close at 10,559.74. The blue-chip index was up as much as 122 points in afternoon trading.

Broader indexes were also higher. The Standard & Poor’s 500 rose 20.43 to 1,301.84, and the technology-heavy Nasdaq composite index rose 51.37 to 2,470.52.

The Dow seesawed all week with declines of more than 1 percent on both Monday and Tuesday, then a rebound of more than 1 percent on Wednesday before tumbling 2.2 percent Thursday. With Friday’s gains, the average ended down 269.54 points, or by 2.5 percent, for the week.

The Dow also finished down 2.1 percent for the month of May, its steepest monthly decline of the year. But it is up 15 percent for the first five months of 1999, a much stronger performance than many expected when the year began.

Trading was light Friday as market professionals eased into the three-day holiday weekend. U.S. financial markets will be closed Monday in observance of Memorial Day.

The low volume and broad-based gains provided an antidote to the week’s volatile ride on Wall Street. The market swung amid persistent fears that any signs of rising inflation will prompt the Federal Reserve to raise interest rates. Higher rates typically cut into profits as it becomes more expensive for companies to borrow money.

But some of the fears about rising inflation and interest rates were tempered after the Purchasing Management Association of Chicago on Friday reported a greater-than-expected drop in its business activity index.

That helped boost stocks, especially banks and financial services shares, which have been hurt by concerns over an interestrate hike. Citigroup rose 2-13/16 to 66-1/4 and American Express gained 4-3/16 to 121-1/16.

A flood of bargain-hunters entering the market Friday also helped lift stocks. Investors were looking to pick up stocks at much cheaper prices than they were just a week ago. Microsoft gained 2 5/16 to close at 80 11/16 and Amazon.com rose 4-3/16 to 118-3/4.

Friday, advancing issues outnumbered decliners by a 2-to-1 margin on the New York Stock Exchange, where volume totaled 782.8 million shares, compared with 978.9 million Thursday.

The NYSE composite index rose 8.24 to 622.26, and the American Stock Exchange composite index rose 4.35 to 778.74. The Russell 2000 index of smaller companies gained 5.76 to 438.68.

Overseas, Japan’s Nikkei stock average fell 1.26 percent. Germany’s DAX index closed up 0.1 percent, Britain’s FT-SE 100 was up 0.4 percent, and France’s CAC-40 closed 0.3 percent lower.

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