Dow Rises as Interest Rate Worries Lessen

Blue chips rose strongly for a third straight day Friday, as bond yields dipped in the face of data suggesting a slowing economy.

The Dow Jones industrial average gained 83.70 points, or 0.9%, to 9,147.07, leaving the blue-chip index up 82.45 points for the week--and less than 40 points shy of the April 21 record close of 9,184.94.

In the broader market smaller stocks had more trouble Friday. The Russell 2,000 index of smaller issues rose 0.4% to 484.94, and losers outnumbered winners by a narrow margin on Nasdaq.

Still, for the week the Russell rose nearly 1%.

The week began with a scare, after the Wall Street Journal reported that the Federal Reserve Board at its March 31 meeting had voted to lean toward tightening credit in the months ahead.

But on Thursday and Friday, new data indicated that despite the economy’s strength in the first quarter, inflation was quiescent. Friday’s data also suggested the economy has begun to slow.

Bond yields, which tumbled Thursday as Fed worries faded, edged lower Friday. The 30-year Treasury bond yield ended at 5.93%, down from 5.94% on Thursday and 6.07% on Tuesday.

Bonds might have performed better on Friday except for a surge in crude oil prices. Near-term oil futures in New York leaped 74 cents to $16.13 a barrel on renewed speculation that members of the Organization of Petroleum Exporting Countries were considering extra production cuts to boost prices.

For stocks, with the first-quarter earnings reporting season winding down, analysts are wondering what catalysts will emerge to drive prices higher or lower.

But at the very least, “The biggest weapon the bears had was the potential for the Fed to raise interest rates, and now they’ve been disarmed,” said Bruce Bittles, a stock market strategist at J.C. Bradford & Co. in Nashville, Tenn.

Among Friday’s highlights:

* Energy stocks zoomed with oil prices. Exxon surged $2.56 to $75.63, Mobil jumped $3.44 to $82.56, Atlantic Richfield gained $2.44 to $80.44 and Western Atlas jumped $4 to $83.

Airline stocks, by contrast, were broadly lower on fuel-cost fears.

* The Dow was helped by new strength in financial stocks American Express, up $3.31 to $105.50, and J.P. Morgan, up $3.88 to $135.13.

Among other financial issues, Fleet Financial rose $3.31 to $89.69 and BankBoston gained $2.94 to $110.88 on a Boston Globe report that they had discussed the possibility of a merger this week.

* Some Internet-related stocks rallied again, including America Online, up $3.56 to $83.50; Broadcom, up $4.75 to $52.75; and ISS Group, up $5.13 to $49.38.

Market Roundup, D4