Dow Up 1.06 as Stocks Rise in Slow Trading : Drop in Dollar, Bond Prices Instills Caution
The stock market inched higher in moderate, lackluster trading Tuesday, showing little conviction in its rise after seesawing narrowly through most of the session.
The Dow Jones index of 30 industrials edged up 1.06 points to close at 2,352.70. Advancing issues outnumbered decliners by about eight to seven on the New York Stock Exchange, with 841 up, 721 down and 422 unchanged.
Big Board volume totaled 164.18 million shares, up from 136.37 million in Monday’s light session.
Analysts said stock prices were dampened by a fall in the dollar on world currency markets and weakness in bond prices.
“I think (stock market traders) are really focusing on the dollar,” said Michael Metz, an analyst for Oppenheimer & Co. However, he added, Wall Street would have been expected to retrench somewhat following its brisk gains late last week and on Monday.
Airlines Strong
Airline issues were strong, boosted by fare increases linked to fuel prices by several major carriers. AMR rose 1 to 59 3/8, Allegis advanced 1 to 90 3/4, NWA was up 1 1/8 at 71, Pan Am gained 3/8 at 5 3/8, Piedmont was up 1/8 at 68 3/4 and USAir rose 1 5/8 to 45 5/8.
Dayton Hudson, a retailer that continued to be the subject of takeover rumors, climbed 2 3/8 to 52 3/4 on volume of 2.1 million shares. A Dart Group spokesman said that “as of this moment, we can’t comment” on rumors that Dart might be interested in buying the Minneapolis-based retailer, which owns Target, Mervyn’s and Midwest department stores. Ann Barkelew, a Dayton Hudson spokeswoman, said the company knew of no reason for either the price or volume activity.
Among other actively traded issues, Detroit Edison was unchanged at 17 1/8, Pacific Gas & Electric was down 1/8 at 20 1/8, New England Electric was up 1/8 at 27 3/8, AT&T; declined to 26, General Electric eased 3/8 to 53 5/8 and Motorola jumped 1 1/8 to 54 3/4.
In the credit markets, bond prices, still moving in sympathy with the weakened dollar, drifted lower in listless trading.
30-Year Bond
The Treasury’s 30-year bond was trading down about 5/16 point, or a little more than $3 for every $1,000 in face amount, late Tuesday. The yield on the bond, which moves inversely to its price, edged up to 8.72% from 8.69% on Monday.
Analysts said traders expected Friday’s report on the April merchandise trade balance to show a deficit of about $13.6 billion, the same as March. They also anticipated a modest rise in the government’s producer price index.
A more startling increase in either number might further depress the dollar, which would cause concern in the credit markets, analysts said.
In the secondary market for Treasury bonds, prices of short-term governments were unchanged to 1/16 point lower, intermediate maturities were down 1/16 point to 1/8 point and long-term issues were down 11/32 point, according to the financial information service Telerate Inc.
In corporate trading, industrials were down point and utilities were off 3/8 point in light trading, according to the investment firm Salomon Bros.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds gained 3/8 point. Trading was light.
Yields on three-month Treasury bills were down 7 basis points to 5.50%. Six-month bills fell 7 basis points to 5.88% and one-year bills were off 8 basis points at 6.38%. A basis point is one-hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, continued to trade in a narrow range. The rate slipped to 6.50% from 6.675% late Monday.
