Dow Climbs 10.13 on News of GNP Growth

NEW YORK â€”  Wall Street stocks rose today, buoyed by news the economy grew faster than expected in the fourth quarter and reassuring comments from Federal Reserve Chairman Alan Greenspan.

But the market ended off its peaks due to a sharp fall in the Treasury bond market, due to fears of higher inflation and interest rates.

The Dow Jones average of 30 industrials ended 10.13 points higher at 2,627.25. In the broader market, rising stocks outpaced declines by a 9-5 margin on NYSE volume of 185 million shares.

The government said the gross national product grew at a 0.9% rate in the fourth quarter, revised upward from 0.5%. Greenspan said he expected economic growth to be slow during the first three months of the year but remain positive.

Bond prices fell slightly in early trading today after the Commerce Department reported that the economy grew by 0.9% in the fourth quarter of 1989.

The Treasury’s benchmark 30-year bond fell 7/32 point, or about $2.19 per $1,000 face amount, while its yield, which rises when the bond’s price falls, rose to 8.47% from 8.44% late Tuesday.

The improvement should ease fears that the economy entered a downturn at year’s end, analysts said. That may mean there is less likelihood that the Federal Reserve will move to ease interest rates.

Lower rates benefit bonds, and James Marshall, a government securities trader with Clayton Brown & Associates in Chicago, said the GNP report “worked against the market somewhat.�

He said trading was light and involved mostly institutional investors.

In the secondary market for Treasury bonds, prices of short-term governments fell from 1/32 point to 1/8 point, intermediate maturities fell 5/32 point and long-term issues were down 3/16 point to 1/4 point, according to the Telerate 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 outstanding Treasury issues with maturities of a year or longer, fell 1.70 to 1,159.35.

Yields on three-month Treasury bills rose to 8.01% as the discount rose 3 basis points to 7.75%. Yields on six-month bills rose to 8.10% as the discount rose 4 basis points to 7.69%. Yields on one-year bills rose to 8.07% as the discount rose 3 basis points to 7.53%.

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.