Dow Rebounds to Finish at Record; Bonds Remain Weak

The Dow Jones industrial average rebounded to close at a fourth record high for the week Friday as investors snapped up bargains after a massive sell-off sparked by surprisingly robust U.S. jobs growth in December.

Bonds remained sharply weaker, and the dollar hit its highest level in about 2 1/2 years against the German mark and the Swiss franc, as the strong data reinforced fears that the Federal Reserve Board may raise interest rates to curb inflation.

The Dow, which fell nearly 70 points soon after the opening, finished the day with a gain of 78.12 points to close at 6,703.79. The Dow, which broke above 6,000 for the first time less than three months ago, gained 159.70, or more than 2.4%, for the week.

Broader market measures also closed at record levels as investors once again used a sharp drop as a buying opportunity.

Stocks started the session in a deep hole, put there by strong monthly employment figures from the Labor Department.

The data included a surprising 262,000 increase in nonfarm payrolls in December, far exceeding the 190,000 average forecast among economists, and a higher-than-expected 0.5% rise in monthly wages.

The report, which suggested the economy remained far stronger last month than many had thought, sent the inflation jittery bond market into a tailspin and interest rates spiking higher.

The benchmark 30-year Treasury bond lost more than a point, boosting its yield to 6.85% from 6.76% on Thursday.

“Today was a tale of two markets and, as expected, bonds got clocked,” said Philip Orlando, chief investment officer at Value Line Asset Management.

Stocks were a different story because “the strong report, in conjunction with some of the other numbers we’ve seen recently, suggests fourth quarter earnings are going to be good,” he said.

Advancing issues trailed decliners by more than a 5-1 margin near the open on the New York Stock Exchange, but finished with a narrow lead.

The Standard & Poor’s 500-stock list and the NYSE composite index both closed at record highs for the first time since Nov. 25. The S&P; 500 rose 4.65 points to 759.50, and the NYSE composite rose 2.18 points to 400.76, its first finish above 400.

The Nasdaq composite index rose 5.82 points to 1,332.02, its third record high this week, and the American Stock Exchange composite index jumped 4.30 points to 586.04.

The dollar rose to 1.5865 German marks, the highest level since August 1994, compared with 1.5765 late Thursday. It climbed to 1.3758 Swiss francs, the highest since May 1994, from 1.3695 on Thursday. The dollar fell as low as 115.25 Japanese yen in early trading before rebounding to 116.07 late in New York, down from 116.37 late Thursday.

Share prices in Tokyo continued a nose dive, with Japan’s key stock index dropping more than 770 points as the country’s ailing financial institutions began struggling with Prime Minister Ryutaro Hashimoto’s plans to force more competition in Japanese markets.

In the last four days, the Nikkei stock average lost 2,142 points, or 11%, closing Friday at 17,303.65. Foreign sellers have led the charge, frantically dumping stocks of banks burdened with mountains of bad debt.

Among Friday’s highlights:

* Cyclical stocks benefited from the day’s rally. Alcoa rose 1 5/8 to 71 1/4, Texaco gained 2 3/8 to 107 3/8 and Exxon rose 2 7/8 to 105 3/4, all record highs. GM gained 1 7/8 to 61 1/8.

* Signs of a strengthening economy in the final months of 1996 encouraged investors that companies will report robust earnings. Motorola rose 1 3/8 to 66 3/8 even after the company reported earnings of 39 cents a share, three pennies short of Wall Street forecasts.

Vitesse Semiconductor rose 4 11/16 to 50 1/2 after reporting that earnings jumped to 25 cents a share from 10 cents.

* Chip maker stocks were mixed after a manufacturers association said orders for new chips fell 2.9% in December.

Texas Instruments gained 1 1/4 to 67 5/8, Applied Materials rose 1 to 41 7/8 and Intel gained 1 1/2 to 144 1/2.

Personal computer makers were strong. Dell rose 2 5/8 to 60 and Compaq jumped 4 to 79 1/8.

* ComAir Holdings retreated 1 1/2 to 23 1/2 after one of its planes, a Brazilian-made Embraer Brasilia 120, crashed late Thursday outside Detroit, killing 29 aboard.

In commodities trading, grain and soybean markets soared after the U.S. Agriculture Department cut its final estimates for 1996 crops and stockpiles and reported the lowest winter wheat plantings since 1978.

At the Chicago Board of Trade, soybeans led the grain markets higher, with March soybeans closing up the allowable daily limit of 30 cents a bushel at $7.29 1/4 following the U.S. Department of Agriculture report. March corn rose the 12-cent limit early and closed at $2.65 1/2, up 7 1/4 cents.

Market Roundup, D4