Indexes Finish at New Highs; Yields Decline

Wall Street kept the momentum going on Friday, as major stock indexes edged up to new highs amid another slide in bond yields.

The Nasdaq composite finished another winning week, rising 0.9% to a record 2,864.48 as Microsoft zoomed 5.4% to $99.44.

The Dow Jones industrials also hit a record, adding 23.43 points to 11,209.84.

Still, losers had a slight edge over winners among stocks overall.

For the week the Dow was up just 0.1%, but Nasdaq surged 2.6% and the Russell 2,000 index of smaller stocks added 1.6%.

Analysts said strong second-quarter earnings reports continue to boost investor sentiment. Of the 113 Standard & Poor’s 500-index companies that have reported second-quarter profit so far, 66% have beaten analysts’ earnings expectations, according to First Call Corp.

Stocks also got a lift this week from benign inflation reports, which gave the bond market more confidence. Yields declined Friday after Richmond Federal Reserve Bank President Alfred Broaddus told the Washington Post he’s “enormously comforted” by the latest inflation data.

Low inflation could keep the Fed from raising interest rates again.

The 30-year Treasury bond yield ended at 5.88% on Friday, down from 5.91% on Thursday and the lowest since late May.

But bonds also may have been helped by a “flight to quality” amid the growing tension between China and Taiwan, analysts said.

In commodities markets, meanwhile, gasoline futures rose to a 21-month high, and crude oil also gained on expectations for tighter supplies. Crude oil for August rose 2.3% to $20.62 a barrel, highest since November 1997.

The stock and bond markets ordinarily might be bothered by rising oil prices, but energy costs have so far just climbed back to levels that prevailed for much of the mid-1990s, experts note.

Among Friday’s highlights:

* Dow gainers included American Express, up $1.63 to $135.88; International Paper, up $1.69 to $53.44; and United Technologies, up $1.44 to $70.25.

* In the tech sector stocks were mixed despite Microsoft’s jump. Sun Microsystems surged $2.38 to $76.13, but Intel lost 56 cents to $67.13.

Also, Seagate sank $3.44 to $26.56 after the disk drive maker reported disappointing earnings and issued a warning for the next quarter. And Altera skidded $4.06 to $41.06 as the maker of programmable-logic chips was downgraded by Morgan Stanley Dean Witter.

PMC-Sierra and QLogic surged, however, after the makers of specialized computer chips trounced earnings forecasts, fueled by demand for high-speed products that help power the Internet. PMC-Sierra jumped $12.50 to $82.50 and QLogic climbed $7.63 to $147.50.

* Tarrant Apparel Group slumped $2.25 to $17.81. The Los Angeles clothing maker said it would miss profit targets.

* Among initial offerings, Paradyne Networks, which makes equipment and software for high-speed Internet access, rocketed $39.25 to $56.25, while Audible, which delivers audio versions of books and newspapers over the Net, catapulted $12 to $21.

Market Roundup, C4