Dow Declines 2.13 Amid Concern Over Inflation, Interest

Prices closed narrowly mixed on Wall Street today after concerns about inflation and higher interest rates eroded the stock market’s earlier moderate gains.

The Dow Jones average of 30 industrials fell 2.13 to 2,709.26.

Advancing issues were slightly ahead of decliners on the New York Stock Exchange, with 695 stocks rising, 675 falling and 550 unchanged.

Big Board volume totaled a thin 77.61 million shares, against 120.98 million in the previous session. Many traders were extending the Christmas holiday weekend.

The NYSE’s composite index fell 0.23 to 191.72.

At the American Stock Exchange, the market value index slipped 0.04 to 370.84.

Stocks tracked the bond market for much of the session, declining in early trading as Treasury prices slumped. Wall Street later shook off the drop in bonds, but in late afternoon, when bond prices continued to drop, stocks gave up their gains.

Treasury prices skidded first because of an increase in a key Japanese interest rate and in later trading because of a surge in oil prices after several oil companies reported refinery shutdowns.

The January price for a gallon of home heating oil jumped nearly 10.74 cents to 92.48 cents on the New York Mercantile Exchange, while the Treasury’s 30-year bond was down about 1 1/4 point, or $12.50 per $1,000 in face amount. The bond’s yield soared to 7.98% from 7.88% late Friday.

Rising energy prices are considered a harbinger of higher inflation and, in turn, higher interest rates.

Bond prices fell sharply and Treasury bill yields rose in early trading today amid wide selling by dealers reducing their portfolios at the year’s end.

The Treasury’s benchmark 30-year bond was down 21/32 point, or $6.56 per $1,000 face amount, around midday. Its yield, which rises when prices fall, jumped to 7.93% from 7.88% late Friday.

The credit markets were closed Monday for Christmas.

Analysts said the selling was dominated by dealers and not customers and that prices reacted sharply because overall dealings were thin.

In the secondary market for Treasury bonds, prices of short-term governments fell 7/32 point to 3/8 point, intermediate maturities declined 3/8 point to 15/32 point and long-term issues were down 9/16 point to 11/16 point, according to Telerate Inc., the financial information service.

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 3.97 to 1,190.19.

Yields on three-month Treasury bills leaped to 7.92% as the discount gained 10 basis points to 7.68%. Yields on six-month bills climbed to 7.95% as the discount increased 12 basis points to 7.56%. Yields on one-year bills were up to 7.79% as the discount gained 11 basis points to 7.27%.