Rebounding Dow Near 9,000; Bond Yields Rise

The Dow moved within 25 points of 9,000 on Friday as the stock market’s nearly nonstop rebound again withstood the temptation to take profits.

The Dow Jones industrial average rose 59.99 points to 8,975.46, more than 1,500 points above its early October low and 362 points from the all-time best close of 9,337.97 set July 17.

It was the eighth straight session without a loss for the Dow, which briefly edged within 10 points of 9,000 earlier in the day.

Broader stock indicators also rose to the highest levels since before the market began its rapid retreat in July.

The Dow has now rebounded 20.2% since it slid below 7,500 on Oct. 8, and holds a gain of 13.5% for 1998. Friday’s advance left the blue-chip measure with a gain of 383.36 points for the week and 609.42 in the last eight sessions.

The market’s monthlong rebound--the Dow has fallen only four times since Oct. 8--comes after months of volatility that prompted many to park money in Treasury bonds for safety.

“We have gone from unlimited greed to unbelievable fear and back to disbelieving greed in the space of just a few short weeks,” said Scott Bleier, chief investment strategist at Prime Charter Ltd.

The renewed confidence in stocks was evident again on Friday as investors pulled money out of the bond market. The yield on the new benchmark 30-year bond rose to 5.38%, from 5.35% on Thursday. It sank to a 30-year low of 4.71% just over a month ago.

Merck rose $3 to $144.94 to lead the Dow’s advance for a second straight session. The Dow also drew a boost from American Express, up $2.44 to $97.31, and Chevron, up $2.25 to $83.31. Among the Nasdaq technology bellwethers, Microsoft rose $2.94 to $109.31 and Intel rose $1.44 to $95.44.

The Standard & Poor’s 500 index rose 7.16 points to 1,141.01, and the Nasdaq composite index rose 19.46 points to 1,856.56.

The NYSE composite index gained 2.92 points to 565.10, and the American Stock Exchange composite index rose 2.78 points to 670.80. The Russell 2,000 index of smaller companies added 3.53 points to 400.32.

Advancing issues outnumbered decliners by a 9-7 margin on the New York Stock Exchange.

For the week, the S&P; gained 3.9%, the Dow rose 4.5% and the Nasdaq jumped 4.8%. The Russell rose 5.9%, outpacing the Dow and S&P; for the fourth straight week.

Several analysts and money managers said small-company shares--which have generally lagged large shares since 1995--will continue surging.

“Momentum will continue bidding these stocks higher,” said Phil Orlando, chief investment officer at Value Line Asset Management, which oversees $6 billion.

That catalyst is the Federal Reserve Board, which cut borrowing costs twice in recent months. Small stocks usually benefit the most when the Fed cuts interest rates, according to a recent study by Prudential Securities Inc.

Among Friday’s highlights:

* Charles Schwab fell $4.31 to $54.06, ending a seven-day rally on concern the stock price overestimated the potential for future earnings growth at the largest U.S. online broker, an analyst said. The shares are up 23% since Oct. 15, when San Francisco-based Schwab reported record third-quarter earnings.

* Safeway rose $2.81 to $50 as Standard & Poor’s announced that the supermarket chain’s stock will be added to the S&P; 500 index next week, when Chrysler’s merger into Daimler-Benz becomes official.

* QAD tumbled $2.06 to $4.56 after the maker of planning software for manufacturers warned that it will report a wider-than-expected third-quarter loss. QAD, based in Carpinteria, blamed slow spending by manufacturers concerned about year 2000 problems and the global economy.

Overseas, Japan’s Nikkei stock average fell 1.5%, Germany’s DAX index rose 0.5%, Britain’s FTSE-100 rose 0.2%, and France’s CAC-40 fell 0.2%.

Market Roundup, C4