Dow Drifts Down 3.42 on Quiet Trading Day
Stock prices posted a small loss today in a drifting session. Trading was quiet.
The Dow Jones industrial average fell 3.42 points to 2,683.89. In the broader market declining issues narrowly led advances.
Volume on the big board was slow, with only 137.7 million shares trading hands.
Brokers noted uneasiness over the market’s uninspired showing Tuesday, when the Dow Jones industrials gave up a gain of about 10 points to finish slightly lower.
That represented a sluggish response to the news that the consumer price index held steady in August, providing fresh encouragement on the inflation outlook.
The Federal Reserve Board’s “beige book” on current economic trends showed the nation’s economy is advancing at a slow to modest rate with substantial regional variation.
Traders said that report had little impact on the market.
Bond Prices Slip
Bond prices fell in early trading today in tandem with a slumping dollar.
The Treasury’s benchmark 30-year bond slipped 3/16 point, or $1.88 per $1,000 face amount, while its yield, which rises when prices fall, increased to 8.10% from 8.09% late Tuesday.
The dollar weakened on reports that the Group of Seven industrialized nations was planning stronger efforts to lower the dollar’s value or put a ceiling on its rise. The dollar was also hurt by reports of an increase in some West German interest rates, which would tend to attract money to marks.
With little else for traders to focus on, the dollar’s dip drew bond prices lower, said Elizabeth G. Reiners, a vice president at Dean Witter Reynolds Inc. In the secondary market for Treasury bonds, prices of short-term governments fell 1/8 point, intermediate maturities fell 1/16 point and long-term issues were down almost 1/4 point, according to Telerate Inc., the 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 Federal Reserve injected reserves into the banking system, but the step was regarded as a technical move to relieve upward pressure on the federal funds rate at the end of a two-week reserve measurement period.
The Fed stepped in when federal funds were trading at 9 3/8%, above the central bank’s goal of around 9%. In spite of the step, the federal funds rate, which is the interest on overnight loans between banks, was quoted later at 9 1/2%, up from 8 7/8% late Tuesday.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 1.95 to 1,180.11.
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 0.33 to 331.86.
Yields on three-month Treasury bills rose to 8.02% as the discount rose 4 basis points to 7.76%. Yields on six-month bills rose to 8.11% as the discount rose 3 basis points to 7.70%. Yields on one-year bills rose to 8.14% as the discount rose 6 basis points to 7.60%.
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.
