Reports Leave Markets Mixed; Peso at 8 to $1

Stocks and bonds gyrated Wednesday and closed mixed amid conflicting reports on the economy’s health.

In the bond market, Tuesday’s big rally continued early Wednesday, then reversed by the end of the day, leaving yields slightly higher.

On Wall Street, the Dow Jones industrials slipped 13.79 points to 5,993.23 even though most issues on the New York Stock Exchange finished up for the day.

Bonds had set the tone early in the day, as yields fell to fresh six-month lows after the government estimated that third-quarter economic growth slowed to a 2.2% real annual rate.

That report came on the heels of Tuesday’s news that overall employment costs rose less than expected in the third quarter, suggesting no threat of significantly higher inflation any time soon.

Bond traders, sensing that interest rates might drop sharply in coming months if the economy continues to cool, bid the bellwether 30-year Treasury bond yield from 6.68% on Tuesday to 6.66% on Wednesday morning.

But yields began to climb later in the day, after another report showed that new-home sales fell just 0.5% last month, and a Federal Reserve Board survey on regional business conditions hinted that wage inflation might in fact be accelerating--despite Tuesday’s employment-cost report.

The T-bond yield rose to 6.70% by Wednesday’s close, and shorter-term yields were also up slightly.

In the stock market, the Dow index surrendered early gains but traded in a fairly narrow range all day. On the NYSE, 1,201 issues rose while 1,179 declined.

The Nasdaq market of mostly smaller stocks continued to bear the brunt of selling, as losers edged winners by 21 to 18. But the Nasdaq composite index, heavily weighted with tech issues, rose 3.18 points to 1,206.23 on the day as key tech names rebounded.

“This was just a treading-water day,� said Ned Riley, investment chief at Bank of Boston. He noted that many traders are waiting for more economic reports this week, including today’s report on September personal income growth and Friday’s key report on October employment.

Meanwhile, in Mexico, the beleaguered peso sank to a new low, reaching 8 to the dollar versus 7.93 on Tuesday, as nervous foreign investors continue to bail out on worries about the economy. The Mexican stock market’s key index fell 36.59 points, or 1.1%, to 3,162.49.

“Jacking up interest rates to bolster the peso is not working anymore,� one trader said.

Among Wednesday’s highlights:

* Retail shares were among the biggest losers after brokerage Goldman Sachs lowered its ratings on several specialty apparel retailers and department stores. Among those cut, Wal-Mart fell 1 1/8 to 26 1/4, Dillard Department Stores lost 7/8 to 30 7/8, TJX tumbled 2 1/4 to 39 and Gymboree dropped 2 1/4 to 31.

Other retailers losing ground included Sears, off 1 to 47 1/2; Federated Department Stores, down 1 1/8 to 32 3/8; and May Department Stores, off 1 1/8 to 47 1/8.

* Many bank and other financial services stocks rallied for a second day on optimism about lower interest rates. NationsBank rose 1 5/8 to 94 1/8, Citicorp gained 7/8 to 98, Wells Fargo jumped 3 1/4 to 267 3/8, SunAmerica surged 1 3/8 to 37 7/8 and Charles Schwab added 7/8 to 24 7/8.

* In the tech sector, computer retailer CompUSA’s stock dove for a second day. The company reported that third-quarter earnings more than doubled, but it confirmed Tuesday’s rumors that recent sales have been sluggish.

CompUSA plummeted 6 to 45 5/8 after losing 5 1/2 on Tuesday.

Yet major computer makers were mostly higher Wednesday after sliding Tuesday. Compaq added 1/4 to 67 3/4, Dell was up 2 13/16 to 78 15/16 and Gateway 2000 was up 1 1/2 to 47 5/8.

* Aetna surged 3 5/8 to 67 after saying it will buy back as much as 3.3% of its stock.