NEW YORK (CNNfn) - Late-day buying drove Wall Street's major stock indexes to surprise record highs Friday, with most of the rally taking place in the last hour of a session marked by choppy trading and concerns over first-quarter earnings.
"Double witching" -- the simultaneous expiration of stock futures and options -- had kept the market on shaky ground through most of the day, with stocks changing direction several times before heading higher as volume wound down in the late afternoon.
The Dow Jones industrial average closed 90.93 points higher at 9,167.50, a new record high. The blue-chip index gained 1.92 percent on the week and is up 15.92 percent on the year.
Advancing issues outnumbered declines 1,756 to 1,165 as trading volume on the New York Stock Exchange reached 667 million shares.
Other markets also advanced to new records. The Nasdaq Composite rose 8.36 to 1,866.60, and the broader S&P 500 index gained 14.55 to 1,122.72. The Nasdaq gained 2.55 percent on the week and has risen 18.87 percent so far this year, while the S&P 500 finished the week 1.08 percent higher and is up 15.69 percent on the year. (Look here for the performance of widely held stocks.)
Despite Friday's bullish close, even optimistic analysts admitted Wall Street's recent uninterrupted bull run has brought the market to a point where a small correction is almost inevitable. Ralph Acampora, chief technical analyst at Prudential Securities, who sees the Dow reaching 10,000 before the end of the year, said a pullback of 3 to 5 percent would be "normal" at this time. (106K WAV) or (106K AIFF)
And Christine Callies, investment strategist at CS First Boston, said the outlook for corporate earnings growth this year is much more moderate than the stellar profits companies enjoyed in 1997. (220K WAV) or (220K AIFF)
The bond market fell slightly after the day's economic data failed to inspire buyers. The benchmark 30-year Treasury bond fell 3/32 of a point in price, for a yield of 5.87 percent.
The dollar fell initially, hurt by the unexpectedly high trade gap figures, but bounced back and remained steady in very quiet trading.
Wall St. flies on wings of drug stocks
Much of the late rally in stocks was concentrated in the drug sector, where investors showed hopes that new treatments will lift profits for their manufacturers.
Shares of Pfizer (PFE), whose impotence drug Viagra seems to have enjoyed strong sales so far, gained 4-1/2 to 105-3/16. Warner Lambert (WLA) rose 7-11/16 to 176-1/2 as investors expected strong returns from its cholesterol-lowering medicine Lipitor. And Eli Lilly (LLY) jumped 5-1/8 to 68-3/8 amid similar hopes for its Evista drug for osteoporosis. Even Dow component Merck (MRK), which Thursday disappointed investors with its first-quarter earnings, inched up 15/16 to 120-3/8.
Focus on earnings
Stock investors also remained focused on the first-quarter earnings reporting season as U.S. corporations continued to deliver mixed results to the market.
After several days of sharp rallies, excitement about Internet-related issues seemed to fizzle, led by a slump in shares of Excite (XCIT), the search-engine company that late Thursday reported a smaller-than-expected first-quarter loss. In a classic "buy the rumor sell the fact" scenario, investors drove the stock up 8-1/8 in regular trading hours Thursday, then pushed it down 15-13/16, or more than 17 percent, to 75-5/16 Friday.
Other Internet stocks also took a hit, with Excite rivals Yahoo! (YHOO) losing 7-1/4 to 121-1/2 and Infoseek (SEEK) off 7-1/2 to 36-11/16.
Shares of Bay Networks (BAY) also slid, but managed to close off the day's lows, losing 15/16 to 23-1/16 after the company said it lost 66 cents a share in the first quarter, including charges, sharply below Wall Street expectations for a profit of 12 cents a share.
The biggest loser was Genrad (GEN), which shed 11-1/4, or more than 35 percent of its value, to 20-3/4 after shocking the market with unexpectedly weak results. Excluding a tax benefit, the electronic systems provider earned 5 cents per diluted share in the first quarter, down from 23 cents a share a year earlier, and far lower than market estimates of 27 cents a share.
Among the day's positive earnings news, shares of @Home (ATHM) jumped 5-1/8, or more than 16 percent, to 37 after the provider of high-speed Internet access said its first-quarter loss from operations shrank due to higher revenues.
And the stock of insurance company Progressive Corp. (PGR) gained 11-7/8 to 138-9/16 after the company reported first-quarter earnings of $1.58 a share, up from $1.02 a share a year earlier.
Also on the plus side, shares of Dow component American Express (AXP) surged 4-1/4 to 106-5/8 on speculation the company might be seeking to join forces with insurance titan American International Group (AIG).
And in the day's hottest initial public offering, shares of Broadcom (BRCM) rocketed to 53-5/8, gaining more than 123 percent after pricing at 24. The company, which makes chips for cable modems and set top boxes, was the leading net gainer on the Nasdaq. 
-- by staff writer Malina Poshtova Zang
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