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FINANCIAL MARKETS

Stocks End Week Steady; Dow Adds 4

September 28, 1996|From Times Staff and Wire Reports

U.S. stocks closed little changed Friday, ending a week of heavy trading that saw smaller issues retake the spotlight from blue chips.

The Dow Jones industrial average edged up 4.07 points to 5,872.92, leaving the index down 15.54 points for the week.

In the broad market Friday, winners topped losers by 13 to 10 on the New York Stock Exchange and by 21 to 18 on Nasdaq.

The Nasdaq composite index of mostly smaller stocks rose 2.07 points to 1,230.05, bringing its gain for the week to 10.36 points, or 0.8%. It is nearing its record high of 1,249.15 set June 5.

Meanwhile, bond yields edged up for the first time this week, after sliding Tuesday through Thursday in the wake of the Federal Reserve Board's decision against tightening credit to slow the economy.

The 30-year Treasury bond yield inched up to 6.91% from 6.88% on Thursday. The yield was 7.04% a week ago.

Bonds were cheered this week not only by the Fed's decision but also by new economic data suggesting that the economy is slowing of its own accord.

But a significant slowdown could unnerve some stock investors, analysts warn, if Wall Street begins to fear widespread damage to corporate earnings growth.

Typical quarter's-end warnings about weaker-than-expected earnings have been challenging investors all week, analysts noted.

In addition, the latest surge in new stock issues is draining away cash that might be used to chase blue chips, experts say.

Even so, the Dow index isn't far from its record of 5,894.74 set Monday.

Next week Wall Street faces a slew of economic reports, including a key report on September manufacturing activity and, next Friday, September employment data.

But concern about third-quarter earnings reports is likely to preoccupy many investors. "The biggest risk [to the stock market] is earnings concern, more than interest rate concern," said Charles Pradilla, market strategist at Cowen & Co. "There will be [earnings] deceleration. The question is how much, and how much is factored into growth rates."

Among Friday's highlights:

* PepsiCo slumped 2 1/8 to 28 1/8 after the company unveiled plans to re-energize its flagging earnings, while at the same time disappointing investors with a downbeat warning about the current quarter's results.

* Whirlpool fell 1 5/8 to 50 1/2 after it said it expects third-quarter profit from operations to fall as much as 40% from a year ago because of weak demand in Europe.

Also warning of weaker earnings was Ogden, the aviation, entertainment and power generation firm. It lost 1 1/2 to 20.

* So-called defensive shares in industries with fairly steady earnings growth remained in demand. Hershey Foods rose 1 3/8 to 49 3/8, Gillette added 3/4 to 71 1/2, Johnson & Johnson rose 1/2 to 51 1/2 and Nike gained 1 5/8 to 121 5/8.

In commodities trading, corn futures fell to a seven-month low in Chicago, and soybeans dropped as forecasts for mild weather in the Midwest eased concern that frost would damage plants and reduce this autumn's critical harvest.

Market Roundup, D4

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