Dow Up 167 as Investors Sift Stocks for Bargains

Stocks finally managed a rally Friday after a volatile week, but long-term bond yields rose and the dollar fell again as investors who were worried about the global economic turmoil looked for safe places to park their money.

On Wall Street, investors raced to scoop up bargains among financial and technology stocks that got hammered earlier this week, sending the Dow Jones industrial average up 167.61 points, or 2.2%, to 7,899.52. For the week, the 30-share index added 114.83 points.

The Nasdaq composite index, weighted with technology issues, jumped 73.37 points, or 5.2%, to 1,492.49 after falling sharply in recent sessions.

“It’s nice to see computers and banks, the two sectors that have been trashed, start to spring back to life,” said Hugh Johnson, chief investment officer at First Albany Corp.

Long-term bond yields rose for the fourth straight session after a week of frenzied buying by investors fleeing to safety. The benchmark 30-year Treasury yield rose to 5.11% from 4.99% on Thursday, up four-tenths of a point from the record-low yield hit on Monday.

“Now, it’s safe-haven buying,” one trader said. “It’s mattress money where people are just saying, ‘OK, emerging markets were trouble, corporates were trouble, junk bonds were trouble, mortgages were trouble, and, guess what, long bonds can be trouble too.’ ”

Investors were pouring funds into bonds with shorter maturities.

Stocks opened higher, extending a recovery that began late Thursday and erased almost all of the 274-point loss in the Dow on Thursday morning.

The rally was also fueled by speculation that the Federal Reserve Board may cut interest rates again ahead of its next regular policy-setting meeting Nov. 17 and perhaps as early as this weekend.

Arthur Hogan, chief market analyst at Jefferies & Co., said it would be uncharacteristic for the central bank to move on interest rates just two weeks after it cut key short-term rates a quarter point.

“I’m surprised by how much validity people are putting into these rumors,” he said.

The third-quarter earnings reporting season, which starts in earnest next week, was also becoming a focus.

Other signs of increased confidence included the move by investors away from defensive-type stocks such as McDonald’s, which fell 75 cents to $61.31, and Procter & Gamble, down $1.44 at $77.38.

In currency trading, the dollar fell again, capping its biggest weekly loss against the yen in 25 years.

The dollar fell nearly 17% against the yen this week and is now off about 27% from its high of 147.63 yen hit in August. The decline came as hedge funds and other investors had to buy yen to cover earlier bets that the yen would fall.

The dollar dropped to 116.95 yen in New York from 119.05 on Thursday.

In commodities trading, gold fell $3.50 to $296.30 an ounce, while crude oil for November delivery rose 16 cents to $14.58 a barrel in New York.

Overseas, London’s FTSE-100 index rose 2.65%. In Tokyo, the benchmark Nikkei average fell 1.12%.

The Standard & Poor’s 500-stock index rose 24.95 points to 984.39. The American Stock Exchange index gained 10.98 points to 574.73.

The NYSE composite index of all listed common stocks rose 9.50 points to 486.70. The average share added 73 cents.

The Wilshire Associates Equity Index--the market value of NYSE, American and Nasdaq issues--was 8,850.910, up 230.11, or 2.67%.

Among Friday’s market highlights:

* Some big tech stocks regained their footing. Microsoft jumped $5.69 to $96.88 and Dell Computer rose $4.38 to $52.81. Intel added $5.38 to $83.81 on expectations of upbeat results when the world’s biggest chip maker reports results next week.

* Among financial stocks, Merrill Lynch rose $3.13 to $45.44, Citigroup gained $3.38 to $35.38 and BankAmerica rose $4.63 to $54.

Market Roundup, C8

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Tallying the Losses

Key U.S. stock indexes extended their losses this week, before rallying Friday. Index declines from their 1998 peaks, through Friday:

Dow indus.: -15.4%

S&P; 500: -17.1%

S&P; mid-cap: -25.5%

Nasdaq comp.: -25.9%

Russell 2,000: -35.2%

Source: Times research