Dow Picks Up 5.82 in Slow Trading : Traders Looking to Treasury Auction for Clues on Rates

The stock market drifted in a narrow range Monday amid persistent doubts about the interest rate outlook.

The Dow Jones average of 30 industrials, which had dropped 5.96 on Friday, rose 5.82 to 2,286.22.

Volume on the New York Stock Exchange slowed to 140.61 million shares from 160.11 million on Friday and the lightest total since a 139.07-million-share day April 20.

Analysts said the market was still confronted with big uncertainties about prospects for the dollar and interest rates.

On the calendar for this week is a $29-billion auction of Treasury bonds and notes today through Thursday in the federal government’s quarterly refunding.

Wall Street investors will watch closely to see what kind of reception the sale receives, and in particular whether demand from foreign investors remains strong, despite the dollar’s weakness in foreign exchange.

In the credit markets Monday, prices of existing 30-year Treasury bonds, which move in the opposite bonds, which move in the opposite direction from interest rates, fell about $10 for every $1,000 in face value.

Some bond traders feel the decline in the dollar will discourage some foreign investors from buying as many of the U.S. Treasury bonds as they have in the past few years. Fewer bidders could mean the notes and bonds will have to be sold at higher interest rates than they would have otherwise.

At the same time, brokers said stocks got some help from new evidence that the domestic economy was still turning in a decent performance. A monthly survey of purchasing managers showed a slight pickup in economic growth for April.

Among the main contributors to the advance in the Dow index was International Business Machines, which rose 2 3/8 to 163 for an all-time high.

Precious metals stocks revived their recent rally, which has been spurred by questions about the dollar and rising gold and silver prices.

Homestake Mining gained 1 7/8 to 38 5/8; ASA Ltd. rose 1 to 66; Campbell Red Lake was up 1 3/8 to 30 3/8; Sunshine Mining gained 3/4 to 8 3/8, and Hecla Mining added 1 5/8 to 23 1/8.

International Controls chalked up the day’s best percentage gain among NYSE issues, jumping 5 to 39 3/4. The company is the subject of a $40-a-share takeover proposal from Synergy Group Inc.

Declining issues slightly outnumbered advances in the daily tally on the NYSE, with 755 up, 813 down and 399 unchanged. The exchange’s composite index of common stocks rose 0.58 to 163.22.

Bond market analysts said large gains in gold and silver prices also contributed to bond traders’ fears about inflation, which erodes bond prices.

In the secondary market for Treasury bonds, prices of short-term governments fell between 9/32 point and 14/32 point, intermediate maturities dropped between 1/2 point and 25/32 point and 20-year issues fell 1 1/8 point, according to Salomon Bros.

The federal funds rate, the interest on overnight loans between banks, was quoted at 7%, unchanged from Friday.