Year’s Slowest Day Yields Little Gain

Stocks posted slims gains in the slowest trading day of the year Friday as only a skeleton crew showed up for a shortened post-Christmas session.

The U.S. market was helped by a rally in South Korea, where stocks surged after the International Monetary Fund and Group of Seven nations pledged to speed $10 billion in aid to the country.

The Dow Jones industrial average pulled back from an early 57-point bounce, but still managed to rise 19.18 points, or 0.25%, to 7,679.31. That was enough to push the year’s gain back above 19%.

Broad-market indexes also retreated from larger moves. But helped by advances in large technology companies, the Nasdaq composite index improved 11.85 points, or 0.79%, to 1511.38. On Wednesday, the index had slumped below the 1,500 level for the first time in five months. The Standard & Poor’s 500-index tacked on 3.76 points, or 0.4%, to 936.46.

“The IMF is stepping up and providing more stability to world markets,” said Bill O’Hearn, a San Francisco-based money manager with McKinley Capital Management Inc., which oversees about $1 billion. “Psychologically, it’s reassuring for U.S. investors.”

Merck and IBM led the Dow’s advance as the only two components in the blue-chip barometer to move up at least one point. Analysts said few investors were willing to make big bets with trading closing at 10 a.m. PST and so many players taking an extended weekend. With the averages still showing significant gains for the year, money managers also are hesitant to make any moves now that might upset their returns for the year.

In the bond market, which ended the day at 11 a.m. PST, the yield on the benchmark 30-year Treasury bond fell to 5.90% from 5.91% Wednesday as traders bet that the U.S. economy will slow in 1998. So far this year, the 30-year bond has gained 17%, including interest payments and capital gains.

Only 154.84 million shares changed hands on the New York Stock Exchange, the lowest tally all year and down substantially from the 263.33 million shares traded Christmas Eve, when stock trading also was shortened. Markets were closed Thursday in observance of Christmas. The previous low-volume day this year was Nov. 28, the day after Thanksgiving, when 189.7 million shares were traded on the Big Board. The NYSE’s three-month daily average volume is 572 million shares.

“You have about a quarter of Wall Street working today,” said Doug Myers, a trader with Interstate/Johnson Lane Inc. in Atlanta.

Advancing issues outnumbered decliners by a 6-5 margin on the NYSE. For the week, the Dow lost 1%, the S&P; fell 1.1% and the Nasdaq declined 0.9%.

Those who did show up for Friday’s abbreviated session encountered mixed signals from overseas, where South Korean shares posted a big rebound, but Japanese stocks slid sharply.

South Korea’s battered market surged 6.74%, the first day of trading since early Thursday’s news that the IMF and the Group of Seven will expedite $10 billion in loans as part of a $57-billion bailout plan.

In Tokyo, however, the Nikkei stock average fell 3.25% on worries about possible further corporate failures in Japan’s fiscal crisis. European financial markets remained closed Friday for post-Christmas observances.

South Korea’s currency, the won, soared 31% at the opening from Wednesday’s close but then lost ground as companies bought dollars to settle import bills, dealers said. The currency closed the day at 1,498, up 22.6% from the previous close of 1,836 on Wednesday. It opened at an intra-day high of 1,400 and hit a low of 1,550.

“You’re seeing some positive steps [to resolve the Asian fiscal crisis], but it’s a work in progress, so the short-term swings on overseas markets aren’t that important a story anymore,” said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum.

Among Friday’s highlights:

* Money-center banks were aided by the South Korean aid package, which lessens the possibility that the country’s cash-strapped companies would default on short-term bank loans. There also were reports that big U.S. banks are looking into buying one of South Korea’s two nationwide commercial banks.

Citicorp rose $1.56 to $121.94, Chase Manhattan improved $2.31 to $106.69, Bankers Trust gained $1.69 to $111.63 and BankAmerica rose $1.56 to $70.81.

* The news out of South Korea also brought a dose of renewed faith in tech companies. IBM jumped $2.56 to $101.69, Cisco Systems rose $1.63 to $53.19 and Intel added 63 cents to $70.88.

Microsoft, which has been hurt lately by the stridency with which it’s battling the government’s antitrust investigation, had its first gain in seven sessions, finishing up $1.81 at $120.75.

* Leading the drug sector was Merck, which advanced $2.25 to $103.50. Warner-Lambert added $1.44 to $123.50 and Schering-Plough $1.81 to $59.

* American depositary receipts for Japanese auto maker Toyota climbed $1.88 to $56.38 as the company spends about $352 million to boost its ownership stake in Japan’s third-largest cellular phone company.

Market Roundup, D4