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Going Up! Dow Tops 8,500

The Dow Jones industrial average closed above 8,500 for the first time ever Friday, just four months after a panicky selloff briefly dragged the famed stock market measure below 7,000.

The Standard & Poor's 500 and New York Stock Exchange managed some marginal gains to close at record highs for the fourth time this week, but the Nasdaq composite index pulled back despite another powerful gain from Dell Computer.

The Dow rose 55.05 to 8,545.72, finishing at a record high for the third day in a row and extending its 1998 gain to more than 8 percent.

The barometer of 30 big companies, which gained 131.78 for the week, has rebounded nearly 1,000 points from an early January slide and more than 1,500 points from late October's tumble, both of which were spurred by fears about how much U.S. companies are being hurt by the economic crisis in Asia.

The market slumped at Friday's open as a key interest rate rose above 6 percent for the first time since mid-December in bond trading. Stocks turned higher as the yield on the long-term Treasury bond eased back under 6 percent, but the buying centered on blue-chip names.

"Valuations are starting to scare some people," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore, noting Dell Computer's 40 percent climb in share price during February alone. "The market's momentum is likely to slow as we get into March because (profit warnings by companies) tend to be announced in the last month of the quarter."

Bonds slumped in the morning as an early reading on February's business activity undermined hopes that the Asian crisis will create enough of a drag on the U.S. economy to keep inflationary pressures in check. Bonds and other fixed-income investments are more attractive when inflation is tame.

The report by a Midwestern manufacturing group showed increases in both factory activity and prices for factory supplies.

Separately, the Commerce Department reported that the American economy grew at a 3.9 percent annual rate in the fourth quarter, not quite as fast as first estimated but still a robust finish to a remarkably strong year.

The new fourth-quarter calculation of the gross domestic product, the sum of all goods and services produced within U.S. borders, marks a downward revision from an earlier 4.3 percent estimate. The change left the GDP increase for the full year unchanged at a nine-year high of 3.8 percent.

The Dow's biggest gainers were J.P. Morgan, up 2 1/2 to 119 1/2; Eastman Kodak, up 2 5/16 to 65 5/8; Hewlett-Packard, up 2 to 67; and Disney, up 1 15/16 to 111 15/16.

Advancing issues outnumbered decliners by an 8-to-7 margin on the NYSE, where volume totaled 574.48 million shares, down from Thursday's busy pace.

The S&P 500 rose 0.67 to 1,049.34, and the NYSE composite index rose 0.87 to 544.26, padding Thursday's record highs.

The Nasdaq composite index, which closed at recod highs three times this week, fell 6.60 to 1,770.51 as a modest pullback by most leading technology names offset Dell's advance. Dell rose 6 5/8 to 139 7/8, but Intel, another major participant in the Nasdaq rally, fell 2 5/8 to 89 11/16.

The Russell 2000 index of smaller companies rose 0.28 to 461.83, edging closer to its Oct. 13 record of 465.21. The small-company dominated American Stock Exchange composite index rose 5.70 to 706.12, about 15 points shy of a complete recovery from October's selloff.

Overseas, Tokyo's Nikkei stock average rose 2 percent, Frankfurt's DAX index rose 0.4 percent and London's FT-SE 100 rose slightly to a new high.

Written by Bruce Meyerson
©1998 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed

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