Stocks Finish Lower After Seesaw Session

Stocks ended broadly lower Friday as blue chips were again whipsawed by computerized program trading and rising bond yields, sending the Dow Jones industrials to their third straight loss.

The Dow followed Thursday’s 94.28-point plunge with a drop of 59.27 points Friday, to end the week at 6,696.48.

That left the index down 187 points, or 2.7%, from its record high of 6,883.90 set on Tuesday, and off 136.62 points for the week--making this the first losing week of 1997.

Broader stock indexes generally mirrored the Dow’s decline Friday, while trading volume declined sharply from Thursday’s extraordinary levels.

Some analysts were relieved that the market didn’t suffer greater losses Friday in the wake of Thursday’s sharp late slide. Losers topped winners by 17 to 8 on the New York Stock Exchange, but that was much improved from early in the day.

Still, a number of analysts said the retreat by stocks is looking more and more like the start of an extended corrective phase for the market.

Higher bond yields continued to vex stocks. Yields crept up again Friday, as investors girded for government reports on the economy and wages next week. Data will include December home sales, January consumer confidence and fourth-quarter gross domestic product growth.

“People are concerned that the strength we’re seeing in places such as wages will wind its way through the rest of the economy,” said Ken Anderson, who helps manage $7 billion in bonds for Lieber & Co.’s Evergreen Funds in Purchase, N.Y.

The yield on the bellwether 30-year Treasury bond ended at 6.88%, up from 6.86% Thursday and 6.83% a week ago. The yield now is the highest in more than three months.

“You get rates going up, and the valuation of bonds becomes more attractive” relative to stocks, said Arthur Micheletti, investment chief at Bailard Biehl & Kaiser, which oversees $1 billion in assets.

Meanwhile, the strong dollar also is a worry. Although a rising dollar attracts foreign investment to U.S. stocks and bonds, it also depresses U.S. companies’ results overseas.

That effect hasn’t been terribly pronounced in fourth-quarter corporate earnings reports, but it will become more of a concern if the dollar keeps rising, analysts say.

On Friday the dollar rose above 120 yen for the first time in about four years, only to tumble after a report that the Bank of Japan bought yen for dollars. The dollar closed at 119.00 yen in New York, down from 119.47 Thursday.

On the plus side, analysts note that corporate earnings reports have generally been better than expected. And buyers lifted the Dow and other indexes from their lows on Friday, suggesting there still are many investors out there looking to buy on dips.

Still, many Wall Street pros concede the market is overdue for a pullback, after streaking higher in recent weeks. “The bond market is about 5% off its high, and for the stock market to decline about 5% off its high would not be out of the realm of the possible,” said Peter Green, vice president of technical research at Gruntal & Co.

Among Friday’s highlights:

* Higher bond yields hurt financial stocks. Among major banks, Citicorp slid 3 3/8 to 109 3/8, BankAmerica fell 3 1/8 to 105 1/8 and Chase Manhattan shed 2 to 89 1/8.

* The strong dollar weighed on some multinationals, including DuPont, down 4 7/8 to 102 5/8; Eastman Kodak, off 2 7/8 to 85 5/8; General Electric, down 2 1/4 to 101 7/8; and Philip Morris, off 1 7/8 to 115 3/4.

* IBM continued to slide in the aftermath of late Tuesday’s earnings report, falling 1 1/4 to 150 1/2. The computer maker’s shares have dropped 17 1/2 points over the last three sessions.

* The tech sector was hurt by computer networker Cascade Communications’ quarterly earnings report, in which the company warned of slower sales growth in a key business. Cascade plunged 23 1/8 to 41. Another networker, XLConnect crumpled 14 7/8 to 8 3/4 after it warned of lower fourth-quarter profit.

The concern spilled over to other networking equipment shares. Cisco Systems fell 3 1/8 to 68 5/8, Xylan tumbled 3 3/8 to 32 5/8 and Cabletron lost 7/8 to 34 5/8.

Elsewhere in the tech sector, Intel lost 1 1/4 to 150 1/2, Dell sank 3 to 66 1/4 and Motorola was off 1 5/8 to 66 1/4. But Microsoft jumped 1 3/16 to 95 15/16, Digital Equipment gained 2 3/8 to 37 1/4 and Western Digital added 1 5/8 to 69 3/4.

* On the plus side, GM was among the 10 Dow stocks that gained, rising 5/8 to 62 1/2. Analysts said GM’s board could boost its quarterly dividend Monday and approve a stock buyback program.

* Many biotech shares advanced. Agouron Pharmaceuticals gained 2 5/16 to 80 5/8, Amgen rose 1 1/4 to 56 1/4, Gilead Sciences added 1 1/4 to 30 and Chiron inched up 1/8 to 18 7/8.

In foreign trading most markets followed Wall Street lower, with key indexes in Tokyo, London and Frankfurt all down 1.2%. Hong Kong shares dropped 1.7%.

In commodities trading, silver continued its sharp rebound, with January futures leaped 10.4 cents to $4.96 an ounce. Gold, however, added just $1 to $353.10.

Elsewhere, coffee prices sank after dockworkers in Colombia ended a 10-day strike, allowing thousands of bags of coffee to flow into the world market.

Market Roundup, D4