U.S. blue-chip stocks went out with a whimper Friday, ending 1993 by retreating sharply after a record-setting week. But smaller U.S. stocks posted gains, and the torrid Hong Kong stock market continued to set record highs.
On the interest rate front, long-term bond yields ended slightly higher amid continued worries of strong economic growth.
The Dow Jones industrial average, in a late reversal after a day of gains, ended the last trading day of the year off 21.79 points to close at 3,754.09, down 3.63 points for the week. Blue-chips had a three-day run into record territory this past week until they posted an 18-point drop Thursday.
In the broad market Friday, advances beat declines 1,179 to 892. The Standard & Poor's 500 index dropped 2.19 to 466.45 and closed out the week 0.93 lower.
Smaller stocks did better, ending a banner year with the Nasdaq composite index jumping 5.72 to 776.80, up 18.10 for the week. The American Stock Exchange market value index finished at 477.15, up 4.60 for the day and up 11.83 for the week.
Most of the market's moves Friday were merely window dressing and tax selling on thin volume, analysts said. Volume was a mere 171.4 million shares on the New York Stock Exchange, down from 193.66 million on Thursday.
"Some stocks that have big moves have them because of the thin volume," one trader said. "It's pretty easy to muscle a stock up or down, because many people are out today."
Concerns about higher interest rates could be a problem for stock prices next year, analysts said, considering the hefty gains achieved in 1993.
"There's just a lot of yellow flags. You've got to be somewhat cautious," said James Kenney, trading manager at Prudential Securities Inc.
Among the market highlights:
* Long-distance phone company MCI Communications continued to gain, rising another 1 1/4 to 28 1/4 on word that it plans to build networks to sell local phone service. American Telephone & Telegraph fell 1/8 to 52 1/2.
* Infinity Broadcasting dropped 3 to 30 1/4 after news that the federal government has delayed approval of three deals by the company because of furor over controversial radio talk show host Howard Stern.
* Stone Container fell 1 3/8 to 9 5/8 after it announced a common stock and debt securities offering. One analyst said the market interpreted the offering as dilutive.
* Genentech gained 1 to 50 1/2, continuing a rally triggered Thursday when the Food and Drug Administration authorized the company to market its DNase drug, the first new treatment for cystic fibrosis in 30 years.
* Walt Disney lost 1 1/8 to 42 5/8 as the company's chairman said in an interview published Friday that he would not rule out closing its troubled Euro Disney theme park in France if the U.S. parent and creditor banks don't devise a restructuring plan.
* The Nasdaq market, citing the growth of its listed stocks, announced it will halve the value of its Nasdaq-100 index beginning Monday. The index, less widely followed than the Nasdaq composite, will be set at 400 when trading begins next week.
Stock markets in Frankfurt, Tokyo and Mexico City were closed for the New Year's holiday.
In London, the FTSE-100 index ended 10.4 points off at 3,418.4, up 6.1 points from last week. In Paris, the CAC 40-share index closed down 13.00 at 2,268.22, a rise of 16.74 from last Friday.
In Hong Kong, stocks eked out a closing record as last-minute bargain hunting erased opening losses. The blue-chip Hang Seng index rose 10.92 points to 11,888.39, up 848.55 from last Friday. In Sydney, the All Ordinaries index closed up 19.1 points to 2,173.6, up 84.4 from a week ago.
The yield on the benchmark 30-year Treasury bond inched upward to close at 6.35%, its highest level since mid-August and up from 6.34% at Thursday's close. Its yield soared Thursday after news of a startling pickup in November home sales and a drop in unemployment claims. Bond yields tend to rise on signs of economic growth, due to fear of interest rates rising.
In other market activity Friday, the dollar ended 1993 generally higher amid continued investor enthusiasm about the nation's economic outlook. In New York trading, the dollar settled at 111.85 yen, up from 111.83 on Thursday.
U.S. oil, gold and silver futures markets were closed for New Year's Eve. In Zurich, gold fell to a late bid of $390.20 per troy ounce, off $1.80. Earlier in Hong Kong, gold rose $1.50 to close at $390.65.