Economy’s Mixed Signs Clip Stocks and Bonds

Technology shares regained some ground, but most stocks edged lower Wednesday as contradictory signs on whether the economy is slowing enough to contain inflation-heightened anxiety before Friday’s key employment data.

The Dow Jones industrial average meandered through the day, falling 13.79 points to 5,993.23 after giving back an early 21-point gain.

Broader measures also retreated after bonds surrendered an opening advance that briefly brought long-term interest rates toward their lowest levels in nearly seven months.

But the technology-laden Nasdaq market posted modest gains as investors looked for bargains after several days of profit taking in leading computer-related shares.

Stocks started the session higher with bonds, which extended Tuesday’s rally after the Commerce Department reported that economic growth slowed dramatically during the third quarter as consumer spending dipped to its weakest pace in five years.

But bonds slipped back near opening levels, pulling stocks lower, after a subsequent report demonstrated some stronger-than-expected activity in home sales toward the end of the third quarter.

The price of the benchmark 30-year bond fell 5/16 points, pushing its yield up to 6.70% from 6.68% on Tuesday.

Many analysts interpreted the news of a modest 2.2% increase in third-quarter gross domestic product as confirmation that business activities have slowed enough to contain worrisome inflation indications, such as rising payroll costs -- a key influence on a product’s price.

Although sales of new homes slipped 0.5% in September, the pace remained brisk at the second-highest rate in more than a decade.

Federal Reserve Board officials, who have so far decided against an economy-slowing hike in the central bank’s key lending rates, are to meet again Nov. 13 to consider whether inflationary pressures have remained in check.

The day’s signals on the economy left many investors wondering what Friday’s reading on October payroll and wage levels will reveal.

“This was just a treading-water day,” said Ned Riley, chief investment officer for the Bank of Boston, calling the week’s remaining data “critical to the direction of the markets.”

Advancing issues barely outnumbered decliners on the New York Stock Exchange.

The Standard & Poor’s 500-stock index fell 0.60 point to 700.90, the NYSE’s composite index fell 0.41 point to 372.72, and the American Stock Exchange’s market value index fell 0.60 point to 565.29.

But the Nasdaq composite index rose 3.18 point to 1,206.23 as several technology bellwethers rebounded.

Among Wednesday’s highlights:

* Banks and other financial services stocks, which enjoy a bigger profit margin on the money they lend when interest rates are lower, were big gainers. NationsBank rose 1 5/8 to 94 1/8, Chase Manhattan rose 7/8 to 85 3/8 and Citicorp rose 7/8 to 98. American Express rose 1/2 to 46 1/4.

* Retail shares were among the biggest losers after Goldman, Sachs & Co. lowered its investment rating on several specialty apparel retailers and department stores. Wal-Mart Stores fell 1 1/8 to 26 1/4, Dillard Department Stores lost 7/8 to 30 7/8 and TJX fell 2 1/4 to 39. Gymboree fell 2 1/4 to 31. Sears & Roebuck fell 1 5/8 to 46 7/8, Woolworth slipped 1/2 to 21 and Dayton Hudson lost 1 to 33 1/8.

* Bethlehem Steel, which has been the year’s worst performer among the Dow industrials, said it will sell four unprofitable units and take a $375-million fourth-quarter charge; it also reported lower quarterly earnings. The stock rose 1/8 to 8 1/8.

* Among tech shares, Intel rose 2 3/8 to 106 3/4 and Dell Computer rose 2 13/16 to 78 15/16.

Overseas, Tokyo’s Nikkei stock average fell 1.3%, Frankfurt’s DAX index rose 0.2% and London’s FTSE-100 fell 0.7%.