Dow Bounces Back 14, but Pessimism Lingers

Stock prices closed widely mixed today as traders, still pessimistic about interest rates and corporate earnings, picked up blue chip issues but shied away from secondary stocks.

The blue chips posted moderate gains after bouncing up and down throughout the day. However, the broader market was lower for much of the session.

The Dow Jones industrial average rose 14.87 to 2,615.32.

Declining issues outnumbered advancers by a margin of about 5 to 4 on the New York Stock Exchange, with 659 stocks up, 848 down and 471 unchanged.

Big Board volume totaled 179.30 million shares, against 148.38 million in the previous session.

The NYSE’s composite index rose 0.40 to 183.60.

Analysts said there was not enough buying momentum for the market to recover from Monday’s sharp drop, in which the Dow industrial average fell more than 77 points.

“Investors and speculators don’t have the courage to buy secondary stocks,” said Michael Metz, an analyst with Oppenheimer & Co.

Monday’s decline was attributed to concerns about interest rates and lower corporate profits, and analysts said those fears lingered on Wall Street today.

Jack Baker, head of block trading with Shearson Lehman Hutton Inc., said the selling wave seemed to be running out of steam, but that the market had no reason to start a rally.

Bond prices sagged and interest rates moved up this morning as a negative mood prevailed in the credit market.

The Treasury’s benchmark 30-year bond lost 9/32 point, or about $2.60 per $1,000 in face amount. Its yield, which goes up when prices go down, rose to 8.33% from 8.30% late Monday.

A strong indication that the market is stuck in the doldrums came Monday, when it failed to react much to a steep plunge on Wall Street, he said.

Yields on three-month Treasury bills rose to 7.92% as the discount increased 2 basis points from Monday’s auction average to 7.67%. Yields on six-month bills dipped to 7.96% as the discount edged 1 basis point lower from Monday’s auction level to 7.56%. Yields on one-year bills rose to 7.96% as the discount went up 2 basis points to 7.42%.

The federal funds rate, the interest rate banks charge each other for overnight loans, was quoted at 8 3/16%, compared to 8 1/8% late Monday.