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Stock and Bond Markets Drift; Dow Up a Point : Volume Light as Traders Await Economic Signals

July 22, 1986|From Times Wire Services

NEW YORK — The stock and bond markets closed mixed Monday after a drifting session while traders awaited new signs of the pace of economic activity and the Federal Reserve's credit policy.

Stocks involved in takeover and restructuring developments chalked up the best gains in the quietest session in nine weeks at the New York Stock Exchange.

The Dow Jones average of 30 industrials edged up 1.13 to 1,779.11.

Volume on the New York Stock Exchange came to 106.28 million shares, down from 149.68 million on Friday and the lightest total since an 85.84-million-share day May 19.

The Commerce Department is scheduled to report today on the nation's gross national product for the second quarter. The data is expected to show only sluggish growth.

If economic growth fails to pick up, the Federal Reserve Board might decide to pursue more generous credit policies to stimulate borrowing and spending, some analysts say.

Volcker to Testify

The investment firm of Smith Barney, Harris Upham & Co. estimates that GNP growth will come in at 2% to 2.5%, down from 2.9% in the first quarter.

Fed Chairman Paul A. Volcker is scheduled to testify before a congressional committee Wednesday about the central bank's views and intentions.

Concern over economic prospects helped send the Dow Jones industrial average into a 122.89-point slide over the past two weeks.

Among individual issues, Colt Industries jumped 26 7/8 to 93 5/8. The company said it planned to distribute $85 plus one new share for each existing share of its stock as part of a recapitalization plan.

McNeil Corp. climbed 11 1/2 to 39. The company said its directors recommended that shareholders accept a friendly takeover bid of $39 a share in cash from Pentair Inc.

Kroger, which announced plans to cut its headquarters costs and dispose of 100 of its stores, picked up 3 5/8 to 59.

Merrill Lynch gained to 35 in active trading. The securities firm reported earnings for the second quarter of 86 cents a share, up from 69 cents in the comparable period last year.

SmithKline Beckman fell 2 1/8 to 90 5/8. The company posted higher quarterly profits, but the increase fell short of advance expectations on Wall Street.

Cummins Engine dropped 1 to 59 3/4. Cummins reported lower second-quarter earnings and said it may have a loss in the third quarter.

Fewer Block Trades

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,059, compared to 2,867 on Friday.

In the overall tally on the Big Board, declining issues outnumbered advances by about eight to seven.

In the bond market, most government bond prices ended with minor changes in light trading. The price of the benchmark 30-year Treasury bond held at late Friday's level, and its yield was 7.18%.

Corporate Bonds Rise

In the secondary market for Treasury securities, prices of short-term governments were off 1/16 point and intermediate maturities were unchanged to down by 3/32 point. The 20-year bond slid 3/32 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials rose 1/8 point while utilities held steady. Among tax-exempt municipal bonds, revenue bonds dipped 1/8 point and general obligations were unchanged. Trading volume was light to moderate.

Yields on three-month Treasury bills rose 3 basis points to 5.75%. Six-month bill yields increased 1 basis point, or a hundredth of a percentage point, to 5.77%. One-year bills were up 3 basis point to 5.81%.

The interest rate on federal funds traded at 6.438%, compared to 6.313% late Friday.

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