Dow Closes 3.99 Higher Thanks to Late Rally

Stock prices were mixed today after dropping in Monday’s session by the biggest amount in nearly two months.

Thanks to a late rally, the Dow Jones average of 30 industrials rose 3.99 to 2,650.99 after being down nearly the entire session. The average fell 40.97 points on Monday.

Declining issues outnumbered advancing by about 4 to 3 on the New York Stock Exchange, with 635 up, 823 down and 531 unchanged.

Big Board volume totaled 141.93 million shares, up from 136.80 million in the previous session.

The NYSE’s composite index rose 0.11 to 190.08.

Wall Street appeared to be following the bond market, where worry over interest rates sent the Treasury’s benchmark 30-year bond down 23/32 point, or more than $7 per $1,000 in face value.

Weighing on the bond market was a Commerce Department on durable goods orders that was interpreted by bond investors as an indication of healthy economic growth. Strong growth is often accompanied by inflation, which hurts bond prices.

Bond prices were down slightly in early trading today as the government reported that orders for durable goods fell 1.9% in July, the fourth decline this year.

The Treasury’s benchmark 30-year bond was down 5/32 point, or $1.56 per $1,000 face amount, around midday. Its yield, which rises when prices fall, rose to 8.19% from 8.17% late Monday.

The report showed manufacturing continuing to struggle despite recent interest rate declines, which analysts said boosted the bond market. But trading sentiment was dampened by a sharply revised June figure to a 1.4% increase from 0.4%, further indicating the country is not heading for a recession.

A slowdown in manufacturing and other economic activity generally is good for long-term fixed-income securities such as bonds.

Jean Buckley, a money market economist with BankAmerica Capital Markets Group in San Francisco, said the report also showed a strong increase in backlogs, “suggesting that three to six months down the road we’ll have some increased activity.”

“The notion that we’re on the cliff waiting to go into a recession is sort of being dispelled,” she said.

In the secondary market for Treasury bonds, prices of short-term governments were off 1/16 point to 1/8 point, intermediate maturities were down 3/32 point to 7/32 point and long-term issues fell 1/8 point to 3/16 point, according to the Telerate Inc. financial information service.

The movement of a point is equivalent to 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, was down 1.57 to 1,174.04.

In corporate trading, industrials were down. 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, fell 0.57 to 328.04.

The federal funds rate, the interest on overnight loans between banks, was trading at 8 7/8%, unchanged from late Monday.