Dow Up 14.82 on Good Economic News

NEW YORK —  Blue chips rose to a record closing high Friday in slow pre-holiday trading, bolstered by a rebounding bond market after a report showing weakness in the manufacturing sector eased fears of an overheating economy. The Dow Jones index of 30 industrials rose 14.82 to a new high of 2,752.09, surpassing the previous peak of 2,743.36 reached Monday and bringing its gain for the week to 19.73 points.

Advancing issues outnumbered declining ones by about 9 to 5 in nationwide trading of New York Stock Exchange-listed stocks.

Big Board volume was 133.30 million shares, down from 143.42 million Thursday.

A collection of economic reports was open to varying interpretations but, on balance, financial markets reacted favorably to the figures.

A report on the job market, which provided the first glimpse of economic conditions last month, suggested that the economy is growing at a moderate rate, making the threat of recession seem more remote.

The Labor Department said the nation’s unemployment rate dipped to 5.1% in August. Non-farm payrolls expanded by 110,000, a total that was reduced by about 108,000 due to strikes.

Separately, a Commerce Department report pointed to a rebound in momentum after months of sluggish economic activity earlier this year. The index of leading economic indicators rose a modest 0.2% in July after registering no gain in June and plunging by 1.3% in May, the biggest drop since late 1987 following the stock market crash.

Countering the positive economic news was the August survey of the nation’s purchasing managers. The National Assn. of Purchasing Management’s monthly poll showed lingering weakness in the industrial side of the economy.

General Motors headed the list of actively traded shares on the Big Board. It added 1 to 50 and more than 2 million shares changed hands. Other major auto makers also posted gains: Ford rose 3/8 to 54 1/4 and Chrysler gained 3/8 to 27.

Some of the blue chips contributing to the advance in the Dow Jones industrial average included: Exxon, up 1/4 to 44; General Electric, up 5/8 to 58 1/4; International Business Machines, up 1/4 to 117 3/8; McDonald’s, up 1/4 to 29 1/8; Merck, up 1/8 to 73 5/8, and Philip Morris, up 3/4 to 164 1/2.

Takeover speculation continued to preoccupy traders. Johnson & Johnson rose 1 1/8 to 53 1/2 amid what were described as vague takeover rumors.

Airline stocks made a comeback from Thursday’s selloff. UAL, parent of United Airlines, jumped 7 1/4 to 287 on word that the pilots union was preparing to make a bid for the carrier. AMR, owner of American, rose 1 3/4 to 89 3/4.

Prices on the Tokyo Stock Exchange closed lower in moderate trading, discouraged by the Japanese yen’s continued fall against the dollar. The Nikkei 225-share average fell 82.98 points to end the week at 34,348.22.

On the London Stock Exchange, share prices soared to a 1989 high in improved volume with the Financial Times 100-share index index closing up 19.6 points at 2,407.5.

Credit

Bond prices surged higher, boosted by the National Assn. of Purchasing Management’s report that suggested a possible slowdown in manufacturing.

The Treasury’s benchmark 30-year bond rose 13/16 point, or about $8.13 per $1,000 face amount, while its yield slumped to 8.12% from 8.19% late Thursday.

Trading was light and ended early ahead of the three-day Labor Day weekend.

Bond prices fell in early trading after the Labor Department released its employment report.

The prospect of a vigorous economy dashed traders’ hopes that the Federal Reserve would relax credit, allowing interest rates to fall and bond prices to rise.

But prices roared back after release of the Purchasing Managers’ Index.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8.938%, up from 8.875% late Thursday.

Currency

The dollar gained against all major foreign currencies following the release of the positive economic data.

Gold prices rose domestically after weakening overseas.

On the Commodity Exchange in New York, gold bullion for current delivery closed at $360.60 an ounce, up 70 cents from late Thursday. Republic National Bank of New York quoted a late bid for gold of $359.25 an ounce, up 65 cents.

The dollar’s ascent began after the government released the monthly employment report.

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 1.17 yen to a closing 145.45 yen from Thursday’s 144.28. It was quoted at 145.23 yen in London, and at 145.60 yen in New York, up from 145.065.