Dow Trading Slows for Holiday, Up 8.17 : Closes Above 2,900 Again on Midyear Shifting

Stock prices moved higher at the outset and managed some modest gains today in sluggish trading in advance of the July Fourth holiday.

The market’s best known indicator finished above 2,900 again for the first time in eight sessions.

The Dow Jones industrial average closed up 8.17 points at 2,906.44. Volume was 130,050,000 shares.

Trading was relatively light as the U.S. financial markets are going to be closed Wednesday in observance of Independence Day.

Analysts attributed the rise in stocks to seasonal readjustments of investment portfolios along with the start of the third quarter.

Institutional investors such as pension funds, they said, were looking for good values among blue-chip stocks as part of mid-year reallocations of funds.

In economic news, the Commerce Department said orders to factories for manufactured goods rose 2.1% in May, offsetting a revised 2.1% decline the previous month.

But market watchers said the report had minimal impact on the stock market as the increase had been widely expected.

They said traders are more interested in the employment figures for June which are to be released on Friday. The monthly reports on employment give the markets their first official glimpse of economic activity in the preceding month and often contain information that affects stock and bond prices.

Prices pulled back in the credit market this morning as bond traders marked time ahead of the Independence Day holiday.

Speculation about an announcement of a new bond sale to raise money for the federal savings and loan bailout restrained trading activity in the early going.

The Treasury also was scheduled to release details of its regular weekly bill auction and of a seven-year note auction next week.

The price of the Treasury’s benchmark 30-year bond was off 5/32 point, or about $1.60 per $1,000 face amount. Its yield, which rises when price declines, edged up to 8.41% from 8.40% late Monday.

Carl Napolitano, a market strategist at R. C. Government Securities Inc., said the pre-holiday atmosphere made for an uneventful session.

“It is dull--very,” he said.

Financial markets and many businesses will be closed Wednesday in observance of July Fourth. Trading was expected to wind down to a trickle later in the day as market participants leave early for the holiday.

Napolitano also said traders were reluctant to stake out new positions before the government auction announcements. Concerns that abundant supplies coming to market will depress prices have been on traders’ minds for weeks.

In late morning, the Resolution Funding Corp., the agency handling the thrift bailout, announced plans to sell $5 billion in 30-year bonds on July 10.

Separately, the Treasury said it will sell $18 billion of three- and six-month bills Monday and $8 billion of seven-year notes July 11.

Traders ignored a Commerce Department report showing orders to factories for manufactured goods rebounded 2.1% in May. The figure was considered old news because it reflected economic activity two months ago.

By contrast, the June unemployment report, due Friday, is widely awaited because it will furnish the first glimpse of how the economy performed last month.

In the secondary market for Treasury bonds, prices of short-term governments were down 1/32 point to 1/8 point, intermediate maturities were 1/16 point to 3/32 point lower and long-term issues posted losses of 5/32 point to 3/16 point, according to 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 Brothers daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.89 to 1,161.68.

Yields on three-month Treasury bills sold Monday fell to 7.95% as the discount slipped 2 basis points to 7.70%. Yields on the new six-month bills declined to 7.98% as the discount dipped 1 basis point to 7.58%. Yields on one-year bills were unchanged at 8.03% as the discount remained at 7.48%.

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 1/4%, down slightly from 8 3/8% late Monday.