FINANCIAL MARKETS : Greenspan Comments Help Bonds; Dow Up 8

U.S. bond yields fell for the first time in five days after Federal Reserve Board Chairman Alan Greenspan indicated to Congress that he isn’t sure the central bank needs to raise rates when its policy-making committee convenes next Tuesday.

Yields on the benchmark 30-year bond plummeted to 7.87% from 7.92% on Tuesday, while its price, which rises when yields fall, rose about 5/8 of a point, or $6.25 per $1,000 in face value.

Greenspan told the Senate Finance Committee that he doesn’t expect a resurgence of inflation over the long term. That led some bond and stock market players to question whether the Fed will come through with a widely expected credit tightening at its policy-making meeting next week. It would be the seventh interest rate increase in the past 12 months.

Greenspan’s comments were enough to persuade some traders and investors that the central bank “might be a lot closer to the end of the (rate increase) cycle than a lot of people have thought,” said Bill Feezer, head trader at Sanwa Securities.

Stocks, meanwhile, ended a seesaw session with modest gains, as earnings disappointments in the technology sector nearly canceled out Greenspan’s encouraging comments. The Dow Jones industrial average ended the day up 8.75 at 3,871.45. The blue-chip indicator fell 17 points early in the session, reversed course at midmorning and gained as much as 29 points, but backed off in the last hour of trading.

Traders said several waves of computerized program trading strengthened the market’s moves.

In the broader market, advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, where volume totaled 342.30 million shares, compared to 325.18 million on Wednesday.

Broad market indexes were mixed. The NYSE’s composite index rose 0.71 point to 254.41. The Standard & Poor’s 500-stock index added 1.58 points to 467.44. The American Stock Exchange’s market value index climbed 1.12 points to 438.52.

But the Nasdaq composite index fell 2.22 points to 760.98, pushed lower by computer-related issues.

Stock investors dislike higher interest rates because they can increase corporate borrowing costs and eventually erode profits.

But the stock market was dragged lower by technology issues, which took a beating following some disappointing earnings reports.

Among Wednesday’s highlights:

* Compaq fell 5 to 37 3/8 after it reported earnings below analyst expectations.

The news from Compaq clobbered other computer makers. IBM dropped 1 5/8 to 72 3/8, Hewlett-Packard ended off 2 3/8 to 103 and Dell Computer lost 1 7/8 to 42 3/4.

Intel fell 5/8 to 70 7/8, Cisco Systems fell 15/16 to 34 15/16, and Apple Computer fell 41/64 to 40 63/64. Storage Technology lost 3 5/8 to 22 3/8 after the company reported lower fourth-quarter net income. Lotus Development ended 2 15/16 higher at 43 9/16, after recovering from earlier losses.

* Rising on a positive earnings report was AT&T;, up 1 1/8 at 49 3/4.

* Boeing Co. finished down 1 1/8 at 46 5/8 despite beating Wall Street expectations with its earnings.

* Bank stocks rose on hopes for steady interest rates. Citicorp added 1 to 40 7/8 and BancOne gained 1 to 29.

Overseas markets were mixed. In Tokyo, the Nikkei 225-share average closed at 18,159.48, up 98.75 points. London’s Financial Times 100-share average gained 13.2 points to 2,982.2, while in Frankfurt, the 30-share DAX average closed up 8.80 points at 2,026.84. In Mexico, the Bolsa ended at 2,056.59, a drop of 39.02 points, or 1.86%.

The dollar closed mostly higher, rising to 1.518 German marks in New York, up from 1.513 marks Tuesday. It slipped against the Japanese yen, changing hands at 99.53 yen, compared to 99.77 on Tuesday.