Dow Shrugs Off Bad News to Close Down by Only 13.29 Points

The stock market closed lower today, pushed down by a tumble in the Tokyo stock market and the highest U.S. inflation figures in over 7 years.

But the market managed to close well above the day’s lows in what traders said was an encouraging development given the day’s news.

The Dow Jones average of 30 industrials closed down 13.29 points to 2,583.56.

Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, with 550 up, 1,000 down and 439 unchanged.

Big Board volume totaled 159.24 million shares, against 147.30 million in the previous session.

The NYSE’s composite index dropped 0.30 to 181.07.

At the American Stock Exchange, the market value index fell 1.93 to 352.95.

Stocks were down as much as 30 points after the government said early in the day that consumer prices rose 1.1% last month, the sharpest climb in 7 1/2 years. In addition, a 3% fall in Tokyo stocks weighed on the market.

Bond prices steadied or rose slightly today after a sharp drop in the previous session that credit market brokers blamed on anxiety about the growing prospect of higher interest rates around the world.

The Treasury’s key 30-year bond, which fell 1 5/8 points or more than $16 per $1,000 in face amount Tuesday, was unchanged or marginally higher by noon. Its yield, which rises when the price falls, was unchanged at 8.66%.

Brokers said the stabilization largely reflected internal short-term market influences of supply and demand. They also said some investors were switching to bonds from stocks.

The consumer price report had minimal effect on the bond market, largely because many bond traders had already taken it into account.

Such reports sometimes rattle the bond market because they may signal rising inflation, which erodes the value of fixed-income securities.

Financial markets worldwide have been preoccupied with rising interest rates since the beginning of this year. The latest fear stems from rumors that the central bank of Japan, an increasingly dominant economic force, would push up domestic interest rates and cause a chain reaction increase elsewhere.

Rising interest rates hurt the market for bonds and other securities. An increase in Japan could attract investors to that country and therefore decrease demand for U.S. bonds, for example.

In the secondary market for Treasury bonds, prices of short-term governments rose about 1/16 point, intermediate maturities were unchanged and long-term issues were unchanged or up about 1/32 point, the Telerate financial information service reported.

The movement of a point equals 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, rose 0.65 to 1,149.59.

Yields on three-month Treasury bills fell to 7.66% as the discount fell 3 basis points from the level at auction Tuesday to 8.02%. Yields on six-month bills fell to 7.75% as the discount fell 1 basis point from the level at auction Tuesday to 8.17%. Yields on one-year bills fell to 7.64% as the discount fell 1 basis point to 8.21%.

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, paid at maturity.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8 5/16, up from 8 1/4% late Tuesday.