Stocks : GNP Report Holds Dow to 2.20 Rise
The stock market struggled to a small gain Wednesday in a tepid response to the latest data on the state of the economy.
The Dow Jones index of 30 industrials edged up 2.20 to 2,389.11.
Advancing issues just barely nosed out declines in nationwide trading of New York Stock Exchange-listed stocks, with 744 up, 681 down and 536 unchanged.
Volume on the floor of the Big Board came to 146.09 million shares, down from 165.34 million in the previous session.
The Commerce Department reported Wednesday morning that the nation’s gross national product rose at a 5.5% annual rate, after adjustment for inflation, in the first quarter of the year.
Without the effects of last year’s drought, however, the agency said the growth rate would have been just 3%.
So analysts concluded that the figures provided support for the belief that economic growth lately has been losing momentum as the Federal Reserve has sought to restrain inflation.
But the inflation figures that accompanied the GNP report were not so encouraging, brokers said, indicating that prices were still rising at a 5% to 5.5% annual rate.
Boeing rose 1 3/4 to 74 and United Technologies gained 3/4 to 48 7/8. United Airlines placed a record-sized order for Boeing jets, some of which will have engines made by United Technologies’ Pratt & Whitney subsidiary.
Teledyne climbed 12 3/4 to 362 3/4. Henry Singleton, the company’s founder and chairman, announced plans to retire from day-to-day management of its affairs.
Some traders evidently concluded that the news increased the chances of the company’s eventual involvement in some sort of takeover or other deal.
Du Pont added 1/2 to 111 on word that first-quarter earnings increased to $3.08 a share from $2.45 a share in the year-ago period.
USX rose 5/8 to 34 3/8 in active trading. On Tuesday, the company reported sharply higher earnings for the first quarter.
By contrast, Compaq Computer fell 1 1/2 to 77 3/4 even though the company posted a substantial increase in its first-quarter profits.
McGraw-Hill fell 3 1/4 to 74 3/8. The company said it has no plans to merge with any other party.
The Wilshire index of 5,000 equities closed at 3,028.159, up 3.637, or 0.12%, from the previous day.
The NYSE’s composite index of all its listed common stocks gained 0.15 to 171.75.
Standard & Poor’s industrial index rose 0.07 to 353.98, and S&P;’s 500-stock composite index was up 0.18 at 306.93.
The NASDAQ composite index for the over-the-counter market picked up 0.67 to 423.38. At the American Stock Exchange, the market-value index closed at 343.41, up 0.34.
In Tokyo, a spurt of buying by investment trusts drove the main Tokyo stock market average to a record level Wednesday, brokers said. The key 225-share Nikkei index rose 190.15 points to 33,434.93.
In London, the trade report propelled the key Financial Times 100-stock index briefly above the 2,100-point level. But the index later drifted back as buying interest wasn’t sustained. At the close, the index was up 22.2 points at 2,093.4.
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Credit
Bond prices were narrowly lower but avoided a sharp drop in the face of the government’s first-quarter GNP report.
The Treasury Department’s benchmark 30-year bond lost 3/32 point, or under $1 for every $1,000 face amount. Its yield remained at about 8.95%.
William Griggs, managing director of Griggs & Santow Inc., a financial consulting firm, attributed Wednesday’s narrow decline to an optimistic market that isn’t responding to negative economic signs.
“It’s that bias in the market that has continued to dominate it,” he said. “Bad news doesn’t hurt it too much and good news is received better than it should be.”
In the secondary market for Treasury bonds, prices of short-term governments ranged from unchanged to up 1/32 point, while intermediates and long-term maturities were down from 1/32 to 3/32 point, according to Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
Corporate issues were modestly higher. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.29 to 303.01.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.09 to 1,131.06.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/4point to 92 1/32. The average yield to maturity declined to 7.61% from 7.62% late Tuesday.
Yields on three-month Treasury bills tumbled to 8.77% as the discount dropped 13 basis points to 8.47%. Yields on six-month bills fell to 9.08% as the discount fell 6 basis points to 8.58%. Yields on one-year bills fell to 9.21% as the discount lost 1 basis point to 8.52%.
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, paid at maturity.
The federal funds rate, the interest on overnight loans between banks, traded at 9.75%, down from 9.813% late Tuesday.
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