Stocks Mixed in Quiet Day; Bond Yields Dip

Stock prices ended the quietest session of 1999 with mixed results Friday as optimism about second-quarter earnings gave way to nagging concerns about interest rates.

The Dow Jones industrial average ended just 17.73 points higher at 10,552.56, paring most of its 115-point gain earlier in the session. The blue-chip index shed 303 points, or 2.8%, during the week, as investors worried about interest rates and corporate profits.

Broader market indicators also turned lower late in the day. The Standard & Poor’s 500 fell 0.47 point to 1,315.31, and the Nasdaq composite index fell 1.34 points to 2,552.65.

“This is a fairly frustrating market,” said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum in New York.

Prices rose after the Commerce Department reported that the economy grew at a 4.3% annual rate in the first quarter, slightly better than the 4.1% estimated in May. The report of a stronger-than-expected economy could have stirred fears of inflation, but investors seemed to interpret the report as an indication of healthy second-quarter corporate earnings.

“We started out well based on the economic news, but there was simply no strong follow-through,” said Tony Cecin, director of institutional trading at Piper Jaffray in Minneapolis.

Technology stocks faltered after Merrill Lynch Internet analyst Henry Blodget issued a report saying America Online may not beat analysts’ earnings estimates by the huge margins it has in past quarters. AOL fell $3.94 to $102.81, pulling down most of the Internet sector.

Volume was paltry throughout the session. Traders said the sluggishness was typical of a summer Friday, but was especially low as investors awaited the meeting of the Federal Reserve’s Open Market Committee on Tuesday and Wednesday. The Fed is expected to raise rates next week in an effort to slow the economy and inflation.

“No one wants to go into this weekend with a major new position,” Cecin said.

Stocks got support from a modest improvement in the bond market. The Treasury’s 30-year bond carried a yield of 6.15%, down from late Thursday’s 6.16%.

Alcoa was the strongest Dow component, rising $2.25 to $62.63 after a Merrill Lynch analyst raised his price target on the stock, citing better-than-expected aluminum prices.

Some high-tech and financial stocks that had been depressed by the recent sell-off recovered a bit. IBM rose 56 cents to $123.13, while J.P. Morgan gained $1.06 to $128.56.

Advancing issues barely outnumbered decliners on the New York Stock Exchange. The NYSE composite index fell 0.63 point to 623.34.

The Russell 2,000 index of smaller companies fell 0.05 point to 443.11.

Among the highlights:

* Phelps Dodge rose $3.31 to $61.69 as the largest U.S. copper producer’s chief rival, Broken Hill Proprietary, said it will shut unprofitable U.S. mines.

* Lockheed Martin rose 69 cents to $35.88, upon a published report that it plans to sell $1 billion in assets.

* Tommy Hilfiger rose $1.13 to $71.63 as the maker of casual clothing and accessories was rated “strong buy” by an analyst at Credit Suisse First Boston. The company plans to expand its women’s clothing offerings over the next few years.

Overseas, Japan’s Nikkei stock average fell 1.1%. European indexes were mixed, while Brazil’s Bovespa dropped 1.9%.

Market Roundup, C4