Dow Rebounds From Mild Setback, Advances 13.29

Stock prices rose today, rebounding from Tuesday’s mild setback.

The Dow Jones industrial average closed up 13.29 points at 2,687.84, with gainers outpacing losing issues 4-to-3.

Volume on the New York Stock Exchange totaled 145.9 million shares.

Traders said investors sold stock index futures and bought the underlying issues, helping the Dow industrials to gain after a mixed day of trading.

The market retreated Tuesday as interest rates came under new upward pressure in the credit markets. Rates declined in today’s activity, giving some encouragement to stock traders.

Most analysts agree that stocks have benefited lately from hopes that the economy could emerge from its recent period of weakness without having to undergo a full-blown recession.

Brokers say that kind of optimism would be buttressed if interest rates do not go much higher than their current levels.

Worries persist, however, that borrowing costs in this country would keep increasing if rates climb further in such other prominent industrialized nations as Japan and West Germany.

Government bond prices bobbed up today after being pounded down Tuesday as the dollar declined and a retail sales report drew negative reactions.

Much of the buying was concentrated in the long end of the credit market and short-term government bonds posted only minor gains. Interest rates, which fall when prices rise, receded slightly.

The Treasury’s closely watched 30-year bond, which tumbled more than 1 point Tuesday, regained 7/16 point, or nearly $2.50 per $1,000 in face amount. Its yield fell to 8.66% from 8.71% late Tuesday.

Jay Goldinger of the investment firm Capital Insights in Beverly Hills, Calif., said business was active in the bond market mainly because traders were realigning short positions previously established on expectations of further price weakness.

Despite this morning’s gains, he said a bearish attitude prevailed in the market. Uncertainty about the economic outlook has made for volatile trading, he said.

Part of the uncertainty was in anticipation of new economic statistics due later this week. Reports on wholesale inflation and industrial production in February are due on Friday.

News this morning that business inventories edged up 0.2% in January while sales expanded 0.3% had no impact on bonds or interest rates.

Market analysts said the report was virtually ignored because it dealt with January’s economic conditions.

In the secondary market for Treasury securities, prices of short-term government issues added 1/16 point to 3/32 point, intermediate maturities rose 5/32 point to 7/16 point, and long-term issues gained 7/16 point to 17/32 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, was up 1.83 to 1,145.57.

Yields on three-month Treasury bills dipped to 8.20% as the discount edged 1 basis point lower to 7.95%. Yields on six-month bills declined to 8.28% as the discount shed 3 basis points to 7.86%. Yields on one-year bills fell to 8.41% as the discount went down 3 basis points to 7.81%.