Dow Ends Big Week Up 59 Despite Bonds

The stock market marched ahead on Friday, closing out another big week on an up note--and again ignoring rising Treasury bond yields.

The Dow Jones industrial average gained 59.99 points, or 0.7%, to 8,975.46--highest since July 30.

In the broad market, winners topped losers by 17 to 13 on the New York Stock Exchange and by 23 to 17 on Nasdaq.

Despite the spotlight on the Dow, smaller stocks continued to lead the market’s stunning rebound of the last four weeks. The Russell 2,000 index of smaller stocks rose 0.9% on Friday and gained 5.9% for the week.

The Dow was up 4.5% for the week. It has surged 20% since it slid below 7,500 on Oct. 8, while the Russell is up 29% since then.

Analysts, trying to explain how the market has rocketed back from what appeared to be a precipice just a month ago, say investors are simply reacting to what has been a tide of good news, after a two-month tide of bad news.

“All the uncertainties affecting the market have gone, with the only possible exception being Russia,” said Courtney Smith, chief investment officer at Orbitex Management. “The market has gone too far too fast, but the bullish case is definitely here.”

“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.

Trading Friday wasn’t affected by much in the way of real news. House Speaker Newt Gingrich’s decision to resign the post wasn’t official until after trading ended.

Many investors still are counting on additional interest-rate cuts by the Federal Reserve Board, which meets next on Nov. 17. The Fed has cut rates twice since Sept. 29 to show support for beleaguered global markets--most of which, like the U.S. market, have responded by shooting higher.

The Dow now is within 4% of its record high of 9,337.97 set on July 17, and is up 13.5% year-to-date. The Russell still is off 8.4% year to date.

Many analysts say that small-company shares have further to gain. “Momentum will continue bidding these stocks higher,” said Phil Orlando, chief investment officer at Value Line Asset Management, which oversees $6 billion.

Stocks overall continue to pay little attention to rising Treasury bond yields. The 30-year T-bond yield edged up to 5.38% from 5.35% on Thursday. It now is the highest since Aug. 26.

For the week the 1-year T-bill yield jumped from 4.19% to 4.64%. Investors are bailing out of “safe” Treasuries as global worries subside.

If nothing else, rising bond yields are helping the dollar, which continued rising Friday against the Japanese yen and European currencies.

Among Friday’s highlights:

* Merck led drug issues higher, up $3 to a record $144.94. Other drug winners included Lilly, up $2.50 to $87.38, and Schering Plough, up $2.19 to $107.25.

* In the tech sector Microsoft rose $2.94 to $109.31--not far from its peak of $119.63--and Intel gained $1.44 to $95.44, while Sun Microsystems added $2.06 to $61.19.

* Safeway surged $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, replacing Chrysler.

* Smaller retailers’ shares were active, with Pacific Sunwear up $1.81 to $24.38, Wet Seal up $1.44 to $19.06 and Ross Stores up $1.31 to $33.31.

* On the downside, 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.

* 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.

Market Roundup, C4