Dow Off 130 in Broad Slide; Yields Climb

Some investors finally decided to take a little money off the table after the stock market’s recent surge, sending share prices sharply lower Friday.

The Dow Jones industrial average fell 130.31 points, or 1.6%, to 7,890.46, leaving the blue-chip barometer with a loss of 31.36 points for the week--the busiest in Wall Street history.

In the bond market, yields edged up from seven-month lows, as some traders braced for Federal Reserve Board Chairman Alan Greenspan’s testimony before Congress on Tuesday, when he’ll give an overview of the economy.

On Wall Street, analysts said Friday’s selling wave wasn’t surprising, with the Dow up nearly 6% in the four weeks through Wednesday, when it closed at a record 8,038.88, the first finish above the 8,000 mark. At that point the index was up 25% year-to-date--nearly surpassing the full-year gain of 26% in 1996.

Losers outnumbered winners by 20 to 9 on the New York Stock Exchange on Friday, on volume of more than 580 million shares. The Standard & Poor’s 500 index sank 1.8% to 915.30, and was off 0.2% for the week. The Nasdaq composite fell 1.3% to 1,547.99 on Friday as some major technology shares pulled back, but the index still was up 3% for the week.

Weekly NYSE trading volume was about 2.96 billion shares, while Nasdaq volume was about 3.66 billion shares. Those were volume records for both markets.

The catalyst for Friday’s decline appeared to be a handful of economic data. The University of Michigan’s regular survey of consumer sentiment revealed a sharp gain in confidence in early-July, suggesting that consumer spending may rise soon. And the government’s report of a wider trade deficit in May showed another surge in imports, also a sign of economic strength.

With the 30-year Treasury bond yield having reached a seven-month low of 6.47% on Wednesday, investors are fearful of any economic news that might suddenly send rates higher.

Even so, the T-bond yield rose only modestly on Friday, closing at 6.53%, up from 6.49% Thursday.

Fed Chairman Greenspan’s testimony next week will be key to the trend for bonds and stocks in the near term, analysts said.

“Greenspan could slow down the steamroller that we’ve seen here” in bonds in recent weeks, said Denny Niedringhaus, who manages $300 million in bonds at Southwest Bank of St. Louis.

“He may reiterate all his old fears” that brisk economic growth will trigger higher inflation, Niedringhaus said.

For the stock market, meanwhile, Greenspan may temporarily take the focus away from second-quarter corporate earnings reports. They have been fairly strong so far, but Microsoft’s profit report late Thursday barely beat analysts’ expectations.

Moreover, the company again warned about slower growth in the months ahead. The news fueled heavy profit-taking in that stock and some other tech issues on Friday.

Among the market highlights:

* In the tech sector, Microsoft slumped $9 to $140.50, Motorola tumbled $7 to $82, Compaq dropped $3.94 to $128.13, LSI Logic sank $2.31 to $32.44, and Intel lost $1.38 to $86.44.

But IBM surged $4.88 to $104.50 ahead of its earnings report on Monday.

* Blue-chip losers included Dupont, down $3.25 to $62.25; Exxon, down $2.44 to $60.44; Procter & Gamble, down $4.31 to $148.75; Gillette, down $3.88 to $97.50; and Eli Lilly, down $4.63 to $109.38.

Overseas, many major foreign markets also slumped. The Paris market index dropped 2.8%, Tokyo’s key index was off 1.3%, Mexico City’s dropped 2% and Bangkok’s lost 0.4%.

Emerging markets in general were lower again, as jitters about currency devaluations weighed on stocks. Brazil again took the hardest hit, with the Bovespa index down 4.7%. For the week, it sank 15%, though it still is up 59% year-to-date.

In commodities trading, meanwhile, gold rose to the highest level in nearly two weeks as speculators who had been selling heavily in recent weeks continued to buy back futures contracts to take profits.

July delivery gold futures at the Comex ended up $4.90 an ounce at $328.90.

Market Roundup, D4