Stocks Rise Sharply but Demand Is Low as Traders Await Report

The stock market rallied sharply today, rebounding from the decline it suffered in the first session of 1989.

The Dow Jones average of 30 industrials, down 23.93 on Tuesday, climbed 33.04 points to 2,177.68.

The dollar rose in foreign exchange trading, reversing its decline Tuesday.

Analysts said traders bid the dollar up amid the uncertainty raised by news that U.S. planes shot down two Libyan fighter jets over the Mediterranean Sea.

But demand for stocks was limited, brokers said, by caution in advance of Friday’s report from the government on the employment situation for December.

If the data show strong growth in payroll employment, many Wall Street analysts believe the Federal Reserve would be more likely to tighten credit further in its campaign to keep inflation from flaring up again.

Advancing issues outnumbered declines by more than 3 to 1 on the New York Stock Exchange, with 1,182 up, 328 down and 445 unchanged.

Big Board volume totaled 149.70 million shares, against 128.50 million in the previous session.

The NYSE’s composite index rose 2.08 to 157.06.

Bond prices rose slightly this morning, supported by strength in the dollar.

The Treasury’s 30-year bond rose about 1/8 point or $1.25 per $1,000 in face amount. Its yield, which moves in the opposite direction from price, eased to 9.07% from 9.08% late Tuesday.

Credit market strategists attributed the reaction to a rising dollar. The dollar historically has been a safe-haven currency during times of political tension.

In the secondary market for Treasury bonds, prices of short-term governments were largely unchanged, intermediate maturities rose about 3/32 of a point and long-term issues were up about 1/8 point, the Telerate Inc. financial information service reported.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

Prices strengthened slightly in the corporate market. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.15 to 293.79.

Yields on three-month Treasury bills fell to 8.49% as the discount fell 2 basis points to 8.21%. Yields on six-month bills rose to 8.85% as the discount rose 1 basis point to 8.37%. Yields on one-year bills were unchanged at 9.08% as the discount stayed at 8.41%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.

The federal funds rate, the interest on overnight loans between banks, traded at 9.37%, down from 9.62% late Tuesday.