Financial and consumer shares led stocks higher Friday, reversing the market's one-day slide and gaining just enough to close the week at record highs.
The Dow Jones industrial average rose 90.93 to 9,167.50, erasing Thursday's 85-point drop and squeaking past Wednesday's record close of 9,162.27.Most broad-market measures also set new highs by a narrow margin as Wall Street quickly shrugged off a brief bout of renewed worry about Japanese and Asian recovery efforts.
Stocks opened lower Friday after a second straight day of sharp declines in Tokyo and Europe, but the U.S. market quickly turned around as prices, particularly on consumer issues that had fallen out of favor in recent days, began looking attractive.
"The remarkable thing about this market is that one day you have a mixed environment and the next you have a tear to the upside," said Eugene Peroni, director of technical research at Janney Montgomery Scott in Philadelphia. "It underscores the fact that cash inflows into mutual funds are continuing at a brisk pace, and investors are willing to move into the market on narrow shocks."
The Dow gained 274.64 for the week, extending this year's advance to about 1,250 points, or 16 percent - double what many analysts had predicted for all of 1998.
American Express jumped 45/8 to 107 to lead the Dow's advance after Business Week said the company might merge with American International Group to compete with the financial services behemoth being created by the proposed union of Citicorp and Travelers Group.
The speculation spread to other leading names that could be forced into fray if the industry competition continues to heat up with mammoth deals like the Citicorp-Travelers merger and Monday's agreement between BankAmerica and NationsBank.
J.P. Morgan also gave the Dow a boost, rising 17/8 to 1443/4, while Merrill Lynch rose 2 13/16 to 94 13/16.
The Dow's other big gainers included Johnson & Johnson, up 2 9/16 to 72 9/16; Procter & Gamble, up 21/4 to 851/8; and Coca-Cola, up 2 to 16 13/16.
Advancing issues outnumbered decliners by a 3-to-2 margin on the New York Stock Exchange, where trading was very heavy for the second straight day. NYSE volume totaled 672.29 million shares, compared with Thursday's 695.39 million.
The Standard & Poor's 500-stock list rose 14.55 to 1,122.72, barely edging past the April 3's record close at 1,122.70.
The Nasdaq composite index rose 8.36 to 1,866.60, topping Thursday's record finish at 1,863.26.
The NYSE composite index rose 7.20 to 584.11, beating that measure's previous best close of 583.17 on April 6.
The Russell 2000 index of smaller companies rose 2.60 to 487.01, slightly shy of Wednesday record of 487.12.
The American Stock Exchange composite index rose 5.02 to 744.37, but still sits about 3 points from a new high.
Overseas, Tokyo's Nikkei stock average slid 1.1 percent after losing 2.5 percent on Thursday amid fears that the Japanese and other leading nations aren't doing enough to help revive the world's second biggest economy.
"We were looking for Japan to be the engine of growth for the Asian region. Instead, it's looking more like an anchor," said Scott Brown, chief economist at Raymond James & Associates, St. Petersburg, Fla. "At this point, no one seems too concerned about Asia, although I think it will be a big concern in the months ahead."
In Europe, Frankfurt's DAX index fell 1.0 percent and London's FT-SE 100 fell 1.3 percent.