Stocks closed narrowly mixed Friday in moderate trading, bouncing back late in the day from weakness tied to rising long-term yields in the bond market.
The Dow Jones industrial average, which rose 8.41 Thursday, added 0.25 to close at 2938.86.Among broader market gauges, the New York Stock Exchange composite index gained 0.14 to 208.40 and Standard & Poor's 500-stock index added 0.28 to 380.80. The price of an average share gained 2 cents.
Declines led advances 751-730 among the 2,027 issues crossing the NYSE tape. Big Board volume totaled 158,160,000 shares, down from
187,090,000 traded Thursday.
The market opened lower, depressed by sharp losses in the government bond market that pushed long-term yields higher.
Bonds were pressured by news that the jobless rate fell to 6.6 percent in April while non-farm payrolls fell by only 124,000. Many economists had expected a bigger loss of jobs, about 145,000, and a rise in the jobless rate of at least a tenth of a percent.
The better-than-expected economic news sent the 30-year Treasury bond down almost 1 full point, with the yield rising back to 8.20 percent.
The bond market typically gains on signs of economic weakness, which can mean that lower interest rates are on the horizon. Signs of strength are taken to mean that rates will probably either hold steady or rise and that inflation may increase, eating into investors' returns from bonds.
Right before the close, however, the market rebounded to little-changed levels.
"Why did the market come back?" asked Alfred Goldman, market strategist at A.G. Edwards & Sons Inc. in St. Louis. "Because it never should have gone down in the first place.
"Today's action said two things about the market. One, we're not quite ready to resume the bull market; that's why we've been backing and filling (holding in a range). And it also said we're not quite ready to latch on to news that the economy is starting to bottom out."
Goldman said that the market has been starved for news that the economy has seen its worst days and that, if it were ready to digest this, it would have responded more positively.
He said the market got news along these lines today, coming on the heels of similar signs earlier this week in the form of data on the U.S. leading economic indicators.
"But stocks don't hold significant downside risk here either," Goldman said. "We're still in a correction, a consolidation of the upside excesses of January to March. We need some more days and weeks of generating cash to revitalize the bull market."
Separately, news came late Thursday that the 30 stocks that make up the Dow industrials average will change Monday.
Caterpillar will replace Navistar International, Walt Disney will replace USX and J.P. Morgan will replace Primerica.
Caterpillar will represent the heavy-machinery portion of the economy and Disney will be the first entertainment company to be included in the average. USX is being replaced because of the company's plans to restructure its stock into steel and energy classes.
J.P. Morgan, a banking company, will replace Primerica since Primerica's insurance and financial-services businesses are already represented in the Dow, mostly by American Express.
On the trading floor, Blockbuster Entertainment was the most active issue, down 7/8 to 101/2. Cox Cable Communications wants to sell all its Blockbuster Video stores.
Duracell, which made a smashing debut Thursday, followed, up another 1/2 to 211/4.
IBM was third, tumbling 21/4 to 1035/8 after Prudential and PaineWebber both reportedly cut profit estimates for 1991 and 1992.
Prices rose in moderate trading on the American Stock Exchange.