Market Posts a Small Loss; Dow Yields 4.97

The stock market closed an erratic session with a small loss Thursday in an atmosphere of caution after the wide swings of the past two days.

The Dow Jones average of 30 industrials, which had jumped 66 and dropped back 51 in the two previous sessions, slipped 4.97 to 2,280.97.

Volume on the New York Stock Exchange came to 173.93 million shares, against 185.93 million Wednesday.

Before the market opened, the Commerce Department reported that the gross national product grew at a 4.3% annual rate, after adjustment for inflation, in the first quarter of the year.

Some analysts voiced concern that that stronger-than-expected showing would put new upward pressure on interest rates. As many observers see it, the better the domestic economy performs, the more likely it becomes that the Fed might tighten credit to try to shore up the slumping dollar in foreign exchange.

Bond prices finished lower, depressed by fears about inflation and worries that the dollar’s continuing slide would reduce foreign demand for U.S. government securities.

The Treasury’s bellwether 30-year bond fell 1/8 point, or about $1.25 for every $1,000 in face value, as its yield rose to 8.52% from Wednesday’s 8.49%.

“Market action over the past couple of days has been volatile and confusing, to say the least,” observed Newton Zinder, an analyst at E. F. Hutton.

Precious metals stocks, which have benefited lately from rising gold and silver prices, were strong again. ASA Ltd. climbed 1/2 to 69; Homestake Mining closed up 1 1/2 at 38 3/8; Sunshine Mining gained to 8; Hecla Mining rose 1 3/8 to 24 1/2, and Campbell Red Lake Mines added 1 5/8 to 31.

Analysts said one reason for the price decline in Treasury bonds was the rise in precious metals prices. Bond investors, they said, view such increases as an indication that the inflation rate is headed higher.

In the secondary market for Treasury bonds, prices of short-term governments were off 2/32 point; intermediate maturities fell point, and 20-year issues were down 3/8 point.

Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds rose 1/2 point in light-to-moderate trading.

The federal funds rate, the interest on overnight loans between banks, traded at 6.475%, down from 7% Wednesday.