Long-term bond yields fell Thursday to their lowest levels in six weeks, as traders grew confident that today's government report on August employment will show continued modest economic growth at best.
On Wall Street, smaller stocks rebounded again while blue chips had another dull session. The dollar was clipped by profit takers.
Bond yields eased in the wake of a flurry of economic reports that mostly painted a picture of a sluggish U.S. economy. Factory orders fell 1.3% in July and consumer spending was weak.
Bond traders, betting that today's employment report will continue the trend, pushed the yield on the 30-year Treasury bond from 6.69% on Wednesday to 6.65% on Thursday, the lowest since July 17.
Economists surveyed by Bloomberg Business News expect that a net 145,000 jobs were created in August, up from 55,000 in July. That would reflect slower economic growth than last year, when the economy grew 4.1% and added 294,000 jobs a month.
Weaker-than-expected job growth could potentially open the door to fresh interest-rate cuts by the Federal Reserve Board later in the fall.
Long- and short-term bond yields have been edging lower over the past two weeks after a jump in mid-August. The 30-year T-bond yield peaked at 6.98% on Aug. 11.
In the stock market, the Dow industrials added 5.99 points to 4,610.56. Despite churning among some of the 30 blue-chip stocks in the index, the Dow overall couldn't get much of a lift from bonds' rally.
Still, winners topped losers by 13 to 9 on the New York Stock Exchange in moderate trading.
Better gains were achieved among smaller stocks. Winners outnumbered losers by 20 to 14 in the Nasdaq market, and the Nasdaq composite index rose 7.50 points to 1,020.11, a 0.7% rise compared with the Dow's minimal percentage gain.
Buyers continued to return to technology stocks after their recent selloff, boosting the tech-heavy Nasdaq index. But buying among smaller issues was broad-based enough to lift the Russell 2,000 index, a key small-stock index, 2.05 points to 305.31. Its recent record high was 305.51.
As corporate earnings growth slows with the economy, "Money is flowing into shares of companies that are going to have the strongest growth," and that includes many smaller technology firms, said Raymond Diggle, director of research at First of Michigan Corp.
Among Thursday's highlights:
* Technology leaders included IBM, up 1 3/4 to 103 3/8; Motorola, up 1 7/8 to 74 5/8; Computer Associates, up 2 1/8 to 69 1/2; Cisco Systems, up 1 3/8 to 65 5/8; Sun Microsystems, up 2 1/2 to 57 7/8; and Hewlett-Packard, up 1 7/8 to 80.
Also, computer chip-maker Micron Technology jumped 3 5/8 to 76 7/8, a new record, after Soundview Financial analyst Richard Whittington reiterated his "buy" recommendation on that stock and on Intel, which added 1 to 61 3/8.
* One loser in the tech field was printer-maker Encad, which plunged 5 3/8 to 16 7/8 after saying third-quarter and 1995 earnings will fall short of analysts' expectations because of sluggish summer sales.
* Among Southland issues, Bell Industries fell 5/8 to 21 1/8. The electronics distributor said it offered to buy rival Sterling Electronics in a one-for-one stock swap. Houston-based Sterling jumped 2 3/8 to 19 5/8 after saying it would evaluate the offer.
* Auto stocks continued their recent rally. GM rose 1/2 to 47 1/8, Chrysler jumped 1 1/2 to 53 3/4 and Ford gained 3/8 to 30 3/4.
* Some metals stocks dropped, keying off the midweek plunge in some base metal prices. Alcoa slumped 1 7/8 to 57 1/8 and nickel producer Inco fell 1/2 to 35.
* Southland S&L stocks were mixed after Wednesday's gains, which were sparked by Glendale Federal's victory in a court case against the federal government over accounting issues.
Glendale fell 3/4 to 15 7/8 after soaring 1 7/8 on Wednesday. Ahmanson dipped 1/8 to 23 3/4. But Coast Savings gained 7/8 to 27 7/8.
* Gymboree tumbled 3 to 29 3/4. The children's clothing retailer said August same-store sales fell 6%.
In currency trading, the dollar skidded amid a surprise selloff in Asia as the trading day began.
There was no recovery as the day progressed, and investors cashed in on earlier gains by selling dollars.
In late New York trading, the dollar fetched 97.34 Japanese yen, down sharply from 99.01 yen late Wednesday.
In commodities trading, wheat prices soared after the European Union extended a freeze on its subsidized grain exports for another month, another sign that global wheat supplies are the tightest in 20 years.
September wheat soared 16.75 cents to $4.49 1/4 a bushel at the Chicago Board of Trade.
Overseas, stocks ended higher in Tokyo. Brokers said sentiment was bolstered by the market's measured reaction to the collapse of two financial institutions Wednesday. The 225-share Nikkei average closed the day up 133.36 points at 18,117.22.
In Mexico, the Bolsa index closed 36.90 points higher at 2,516.99--ending above the key 2,500-point level for the first time in more than two weeks.