Stocks Mixed as Bonds Advance; Dow Up 0.88
Stock prices finished mixed Tuesday after a quiet and meandering session on Wall Street. However, bond prices were sharply higher, with most of the increase coming in the afternoon session.
Some savings and loan issues advanced as interest rates fell in the credit markets.
The Dow Jones average of 30 industrials, up more than 4 points at midday, closed with a 0.88 gain at 1,253.86.
Volume on the New York Stock Exchange was 83.98 million shares, compared to 79.96 million Monday.
Neutral Trend Established
The market has been in a neutral trend for the past couple of weeks, with the Dow Jones industrial average fluctuating between 1,250 and 1,275. Not since March 19, when it rose 21.42, has the average showed a daily change of more than 10 points.
Analysts say this sluggish behavior has become a cause, as well as a symptom, of general apathy among investors.
Wall Streeters are cautiously watching first-quarter earnings reports as they begin to come in from the nation’s major corporations.
These may produce a good many disappointments, analysts say, because the economy in general, and manufacturing industries in particular, have experienced slower-than-expected growth lately.
However, observers also point out that investors have had plenty of advance warning of this prospect by now, and much or all of it is presumably already reflected in stock prices.
International Business Machines rose 3/4 to 124 5/8, rebounding from a 3 1/8-point drop Monday. The company, which is due to issue its first-quarter earnings report later this week, has said that its results will come in below those posted for the first three months of 1984.
In the savings and loan group, Great Western Financial climbed 1 to 28 5/8, CalFed 1 1/8 to 19 1/8,Golden West Financial 1/2 to 30, Home Federal Savings & Loan 1/2 to 24 5/8 and Great American First Savings 5/8 to 16 3/8. The five issues hit 52-week highs.
Papercraft jumped 1 7/8 to 18 3/4. The company agreed to be bought out by a newly formed corporation in a transaction in which present shareholders would receive $18 a share in cash plus debt securities with an estimated market value of about $2 a share.
Allied Corp. rose 1/2 to 40 3/8 on top of a 3 1/2-point advance Monday, when the company reported plans to sell a half-interest in its Union Texas Petroleum subsidiary.
Declines slightly outnumbered advances on the Big Board.
In the credit markets, bond prices rose by as much as $10 for every $1,000 in face value, with most of the improvement coming in the afternoon session.
Analysts said part of the rally appeared to stem from traders’ reactions to remarks by Federal Reserve Board Chairman Paul A. Volcker about the possibility that the economic expansion could fade.
“He indicated that the economy may be losing steam because of the dollar’s strength and other factors,” said Maria Ramirez, a senior financial economist for the investment firm Drexel Burnham Lambert.
Slowing Economy
A slowing economy would reduce upward pressure on interest rates, a development that would be beneficial for bond prices.
In the secondary market for Treasury bonds, prices of short-term governments rose 10/32 point, intermediate maturities rose from 1/2 point and to a full point and long-term issues were up a full point, according to the investment firm of Salomon Bros.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials rose 3/4 point and utilities were up a full point in moderately active trading.
Among tax-exempt municipal bonds, general obligations and revenue bonds were each up 1/2 point.
In secondary trading, yields on three-month Treasury bills were off 4 basis points at 8.09%. Six-month bills fell 12 basis points to 8.46%, and one-year bills were off 15 basis points at 8.64%.
