Stocks Snap 3-Day Losing Streak; Dow Regains 13.92 : Bonds Pick Up Lost Ground as Federal Funds Rate Falls

From Times Wire Services

A late round of buying pushed stock prices higher Wednesday, reversing a three-session decline.

The Dow Jones average of 30 industrials, down a total of 43.45 points in the last three trading days after hitting record highs last week, recovered 13.92 to 2,171.96.

Volume on the New York Stock Exchange increased to 172.35 million shares from 168.29 million Tuesday.

Analysts said many traders regarded the market’s recent pullback as a healthy, mild “correction” after its dramatic gains through the first five weeks of the year.


As stock prices retreated, they apparently attracted buyers who had been waiting for a pullback.

Some hesitancy of late has been attributed to uncertainties about weakness in the dollar and a modest upswing in interest rates. Rates climbed again in the government securities market Wednesday.

Bond Prices Steady

The bond market ended a volatile session little changed as they followed the lead of the federal funds rate, a key interest rate.


The federal funds rate, the interest charged on overnight loans between banks, dropped sharply to 4% late in the day after trading in a 6.675% to 6.75% range.

With the drop in the federal funds rate, bond prices, which move in opposite directions from interest rates, rose. Prices had fallen earlier as the fed funds traded higher, and so ended the day little changed from Tuesday’s close.

In the stock market, British Airways’ American depositary shares traded at 16 3/4 on volume of more than 2.8 million shares, making their debut as part of a public offering in Britain.

Johnson & Johnson climbed 3 to 80. The company said it had sought approval from the Food and Drug Administration to allow it to make and sell a new sweetener, and also reported higher operating earnings for the fourth quarter of last year.

Another blue chip that enjoyed a strong showing was Eastman Kodak, up 2 at 78 3/4. The company declined to comment on rumors that it might be planning a stock repurchase or other financial move.

Elsewhere among the large-capitalization issues, General Electric gained 1 1/8 to 99 3/8, Minnesota Mining rose 1 3/8 to 131, IBM gained 5/8 to 134, American Express added to 67 5/8 and AT&T; rose 1/8 to 23 7/8.

Carter-Wallace, which has been benefiting from publicity about condoms as a means of reducing the risk of acquired immune deficiency syndrome, rose 8 to 130 1/2.

Reebok International picked up 3 1/8 to 34 5/8. The company recently reported an increased order backlog at the end of 1986 from a year earlier.


Large blocks of 10,000 or more shares traded on the NYSE totaled 3,488, compared to 3,142.

Bond market analysts said the fed funds rate dropped because banks reached the end of a two-week computation period during which they determine how much money they must have in reserve.

The banks are required by the Federal Reserve Board to maintain a certain amount of funds in reserve, based on their deposits. Their computation period ended Monday and they were required to have the funds on account Wednesday, when they found reserves were in excess of requirements, the analysts said.