S&P; Hits Record; Other Indexes Post Small Gains

NEW YORK â€”  The S&P; 500 notched a record high on Friday for the second time in three days, but most stock averages posted only marginal gains as the market turned cautious after rallying earlier in the week.

Bonds prices rose, but the dollar slid against the Japanese yen on fears of further intervention of U.S. and Japanese central banks.

The Dow Jones industrial average surrendered most of an early 56-point gain and finished just 8.96 points higher at 8,944.54, extending the week’s gain to 231.67.

The Standard & Poor’s 500 index rose 3.92 points to 1,133.20, edging past Wednesday’s record high of 1,132.89, and the Nasdaq composite index rose 6.28 points to 1,869.53.

It was the fourth straight winning session for the Dow, but the second day in a row in which it retreated into the close, barely finishing higher. The Dow gained just 11.71 points on Thursday after jumping 212 points the previous two sessions.

“It’s some relief that the market did rally this week, and that has a lot to do with the end of quarter,� said John Mendelson, head of market analysis at Charles Schwab Capital Markets. “It’s not politically correct to have cash.�

On the New York Stock Exchange, advancing issues outnumbered decliners by a 6-5 margin in sluggish trading of 621.48 million shares.

The NYSE composite index rose 1.39 points to 577.53, and the American Stock Exchange composite index rose 3.91 points to 717.87.

The Russell 2,000 index of smaller companies rose 0.11 point to 450.27.

But there was still caution among investors as they eyed the renewed slide in the yen and waited for second-quarter earnings reports to begin rolling in after next week’s meeting of Federal Reserve Board policymakers.

“People are still watching the yen-dollar. The market has not paid much attention to it in the last couple of days, but it’s something they have one eye on,� Mendelson said.

A possible rescue merger between one of Japan’s largest banks, Sumitomo Trust & Banking, and troubled Long-Term Credit Bank of Japan led to some increased optimism [See story, D1]. Bad loans choking Japan’s banking system are estimated at $546 billion.

Treasury Secretary Robert E. Rubin, accompanying President Clinton on a visit to China, said China has no plans to devalue its yuan, a move the Chinese had been considering as the yen fell and that would worsen Asia’s woes.

In late afternoon trading, the dollar was at 142.44 yen, slightly below Thursday’s 142.30 close and off the 142.90 high seen earlier in New York. The dollar stood at 1.8090 marks, over a full pfennig above Thursday’s 1.7980 close.

The benchmark 30-year Treasury bond price rose. Its yield, which moves in the opposite direction, fell to 5.63% from 5.65% at Thursday’s close.

* Stock gains were restrained by losses in AT&T.; The largest U.S. long-distance phone company fell after it said its $46.5-billion purchase of Tele-Communications will dilute earnings for at least two years.

AT&T; fell $1.63 to $56.75, and is down 12% since Tuesday, the day before the TCI purchase was announced. TCI fell 56 cents to $38.69.

* Adobe Systems fell $1.94 to $42.44 after the No. 1 maker of desktop software for sophisticated graphics said it earned less than expected in its fiscal second quarter ended May 29.

* Parametric Technology fell $4.69 to $29.06 on concerns that the software company’s efforts to reorganize its sales force and shift to a new product will cut into revenue.

Overseas, London’s FTSE-100 closed up 0.32%. In Tokyo, the 225-stock Nikkei average closed up 0.51%.

Market Roundup, D4