Dow Rises a Fraction; Trading Volume Light

Wall Street stocks closed virtually unchanged today, shrugging off the news that Drexel Burnham Lambert had filed for bankruptcy.

The Dow Jones industrial average ended with a gain of 0.22 point at 2,624.32.

Volume on the New York Stock Exchange was a light 138.53 million shares.

Advancing issues slightly outnumbered declines on the New York Stock Exchange, with 740 up, 684 down and 517 unchanged.

The NYSE’s composite index gained .36 to 183.21.

Traders said news that the parent firm of the once-powerful brokerage had filed for Chapter 11 bankruptcy protection had little impact. Much of today’s trading was based on technical factors, they said.

Government bond prices were slightly lower in early trading today as the market smoothly absorbed the liquidation of bonds belonging to Drexel Burnham Lambert Inc., whose parent company filed for bankruptcy protection on Tuesday.

Drexel’s financial problems dominated activity in the previous session, boosting U.S. Treasuries as investors sought out high-grade issues. But analysts said that the flight to quality drew to a close today.

The key 30-year bond, which rose 17/32 point on Tuesday, was off 3/16 point or less than $2 per $1,000 in face value. Its yield, which rises when the price falls, inched up to 8.40% from 8.38% late Tuesday.

Drexel is liquidating its portfolio of government securities, valued at about $1 billion. Its parent company sought protection from creditors under Chapter 11 of the federal Bankruptcy Act late Tuesday.

“It seems to be going quite smoothly,” said Elizabeth Reiners, a vice president at Dean Witter Reynolds Inc.

In the junk bond market, prices moved higher, buoyed by increases in the value of better-grade issues. “People are realizing that not all companies are dogs and that some high-yield coupon debt does have value,” Reiners said.

In the secondary market for Treasury securities, prices of short-term government issues fell 1/8 point, intermediate maturities lost 1/8 point to 3/16 point, and long-term issues slipped 1/8 point, according to figures provided by Telerate Inc., a 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 all outstanding Treasury issues with maturities of a year or longer, slipped 0.53 to 1,164.81.

Yields on three-month Treasury bills rose to 7.84% as the discount gained 6 basis points to 7.59%. Yields on six-month bills rose to 7.97% as the discount rose 3 basis points to 7.57%. Yields on one-year bills were at 8.01% as the discount advanced 5 basis points to 7.46%.

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.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8 1/8%, down from 8 3/16% late Tuesday.