Dow Quietly Edges Up 3.12, Ends 8-Day Skid
Stock prices finished higher today in lackluster trading, ending eight days of losses, as investors awaited Friday’s report on wholesale prices.
The Dow Jones industrial average gained 3.12 points to 2,374.45. Advances led declines by about seven to six in light New York Stock Exchange volume of 147 million shares.
The market opened nearly flat and traded in a narrow range throughout most of the session.
Early in the day, investors focused on the bond market and the second day of the Treasury’s $28.75 billion quarterly refunding.
“It was a very lethargic market with people watching the refunding,” said Thomas Walsh, head of equity trading for Nikko Securities International.
Stock and bond prices fell Tuesday in response to the Treasury’s sale of three-year notes. Analysts said investors were concerned that U.S. and foreign investors bought fewer of the notes than expected and feared more of the same in the second round.
But bond prices recovered slightly and stocks followed after the $9.50-billion sale of 10-year notes on what observers said was speculation that at least one foreign investor had made a major purchase.
However, volume remained light with institutional investors staying on the sidelines, reluctant to make commitments.
The final day of the sale is Thursday, when the government will auction 30-year bonds.
Traders said the market also remained cautious ahead of the retail sales and producer price reports due Thursday and Friday respectively. Investors hope the reports will provide a better clue about whether the economy is continuing its robust growth.
Signs of continued strength could mean inflation is still a problem and that the Federal Reserve will continue tightening credit by raising interest rates. Higher rates have slowed housing and other sectors and raised fears of a recession.
Bond prices fell in early trading today, reflecting pessimism over two key government auctions of long-term securities.
The Treasury’s benchmark 30-year bond was down 7/32 point, or $2.19 per $1,000 in face amount, at midday after falling more than $10 per $1,000 in face amount Tuesday after a poor government auction of three-year notes.
Its yield, which moves inversely to price, rose to 9.11% from 9.09% late Tuesday.
Analysts said trading volume was thin today in anticipation of Treasury auctions of 10-year bonds and 30-year bonds.
Kevin Flanagan, a money market economist with Dean Witter Reynolds Inc., said the disappointing auction of three-year notes Tuesday was a harbinger of hard times in the bond market.
Traders said individual investors and U.S. and Japanese institutions bought far fewer of the three-year notes than expected in the Treasury’s quarterly refunding auction that raises money for government operations.
