Dow Advances 5.51 on Bargain-Hunting Day
Wall Street stocks rose today on light bargain hunting in scattered issues, edging the Dow index closer to the 2,700 mark.
The Dow Jones industrial average rose 5.51 points to 2,693.29. It had briefly touched a high of 2,702 earlier in the day.
The index of 30 leading shares has had trouble returning to its all-time closing high of 2,722.42 reached Aug. 25, 1987.
New York Stock Exchange volume was a moderate 150 million shares and advances led declines by nearly 8-7.
Traders described the market’s rise as timid and for the most part investors were sidelined, waiting for Thursday’s U.S. trade figures for June and Friday’s consumer inflation report for July.
Analysts said investors were remaining cautious after the market’s recent rally.
“It’s summer caution,” said Carter Randall, an equities analyst with the Randall Co. “As the market goes up there’s selling pressure and it keeps the market weak.”
Technology stocks, including IBM, lagged during most of the session but cyclical stocks such as autos kept that sector firm, said Charles Jensen, chief technical analyst for MKI Securities Corp.
“The market is still looking for a base of support following the decline that began last week,” Jensen said.
The Dow Jones industrial average fell nearly 29 points on Friday after bonds skidded following new government data that showed the economy was not as weak as thought. The report diminished hopes that the Federal Reserve would lower interest rates.
Government reports this morning on July U.S. industrial production and capacity utilization and housing starts appeared to be in line with expectations and had little impact on the market, analysts said.
Bond prices were little changed in light trading early today, shrugging off the government’s latest economic data.
The Treasury’s closely watched 30-year bond was down 1/16 point, or about 62 cents for every $1,000 in face value, at around midday. Its yield, which rises when prices fall, edged up to 8.16% from 8.15% late Tuesday.
On Tuesday, bond prices recovered some ground after consecutive sell-offs.
Analysts said bonds showed little reaction to reports today that new housing starts and industrial production rose and that the factory operating rate remained flat in July.
“They basically show a moderating economy but one that’s not threatened by a recession,” said Kevin Flanagan, chief money-market economist at Dean Witter Reynolds Inc.
He noted that the market also was subdued by traders’ caution ahead of more government reports: Thursday’s merchandise trade figures for June and Friday’s retail price inflation for July.
Secondary Market
In the secondary market for Treasury bonds, prices of short-term issues were 1/32 point lower to 1/8 point higher, intermediate securities edged up 1/16 point to 3/32 point and 20-year issues gained 1/32 point, according to the Telerate Inc. 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.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on outstanding Treasury issues with maturities of a year or longer, edged up 0.75 to 1,178.72.
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, was up 0.02 at 327.21.
Yields on three-month Treasury bills slipped to 8.25% as the discount lost 2 basis points to 7.98%. Yields on six-month bills declined to 8.25% as the discount slipped 1 basis point to 7.83%. Yields on one-year bills fell to 8.25% as the discount declined 1 basis point to 7.69%.
