Newspaper article THE JOURNAL RECORD

Stocks Advance on Lower Interest

Newspaper article THE JOURNAL RECORD

Stocks Advance on Lower Interest

Article excerpt

NEW YORK (AP) _ A steep slide in interest rates Friday helped stock investors overcome uneasiness about the economy's health and Wall Street managed to move modestly higher in subdued pre-holiday trading.

The Dow Jones industrial average finished with a gain of 7.83 at 3,633.93, paring its deficit for the week to 6.70 points.

Advancing issues outnumbered declines by about 8 to 7 on the New York Stock Exchange.

Volume on the floor of the Big Board as of 4 p.m. slowed to 195.92 million shares from 259.41 million in the previous session. Activity tapered off in the afternoon as market participants left work early for the long weekend. Financial markets will be closed Monday for Labor Day.

An unexpectedly poor reading on nonfarm payrolls combined with a decline in the government's chief gauge of future economic activity initially put the stock market in a somber mood.

But stocks reversed course when the bond market embarked on another buying binge that sent prices surging and interest rates tumbling.

Bond investors enthusiastically greeted the signs of sluggish economic growth as an indication that inflation will remain tame _ a plus for bonds.

By the end of an abbreviated day for bond traders, the price of the Treasury's 30-year issue had rocketed up 1 points, or $13.75 per $1,000 in face value. Its yield, which moves in the opposite direction, plunged to 5.94 percent from 6.04 percent late Thursday. Yields on 10-year Treasury notes plunged to 5.29 percent, the lowest level on any 10-year security since 1967.

Falling rates have made interest-sensitive investments _ like bonds _ less rewarding, which has steered money into stocks and helped sustain this summer's advance on Wall Street.

The buying incentive for bond investors came when the Labor Department reported nonfarm employment fell by 39,000 in August as business payrolls continued to shrink in the manufacturing sector and most other industries showed small changes in employment levels. …

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