Stocks closed with small gains today, continuing a modest recovery from Monday's violent fall.
The Dow Jones industrial average advanced 8.42 points to 2,930.94.
Advances led declines by a 3-2 margin on light New York Stock Exchange volume of 164 million shares.
A recovery in the bond market underpinned the stock market advance.
Weaker than expected durable goods orders reported by the government early in the day eased worries over inflation and supported the view that the Federal Reserve might ease credit.
On Monday, the Dow 30 fell 56 points, gaining back 18 points Tuesday.
Bond prices were higher in sluggish early trading today.
The Treasury's benchmark 30-year bond was up 1/8 point, or $1.25 per $1,000 face amount, around midday. Its yield fell to 8.56% from 8.57% late Tuesday.
Analysts attributed the rise to a bigger-than-expected decline in order to U.S. factories for "big-ticket" manufactured goods. Bonds tend to increase on signs of weakness in the economy.
Additionally, market rumors that budget negotiators in Washington were close to agreeing on a package that would slash $50 billion from the fiscal 1991 federal deficit helped support prices. The reports were not confirmed.
"Those are the dominant factors in a very sluggish trading session," said William Sullivan, director of money market research for Dean Witter Reynolds Inc.
On Tuesday, the bond market continued a retreat from big gains a day earlier when prices soared in reaction to turmoil on Wall Street. Traders have been concerned in recent sessions about the direction of the Federal Reserve's credit policy.
In the secondary market for Treasury bonds, prices of short-term governments were up 1/16 point to 5/32 point, intermediate maturities gained 1/32 point to 1/8 point and long-term issues were up 5/32 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 Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was up 1.99 to 1,159.53.
Yields on three-month Treasury bills fell to 7.77% as the discount fell 4 basis points to 7.53%. Yields on six-month bills declined to 7.78% as the discount lost 4 basis points to 7.40%. Yields on one-year bills were down to 7.83% as the discount dropped 4 basis points to 7.32%.
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 7 15/16%, down from 8% late Tuesday.