Bond Yields Up Sharply; Dow Loses 36.58 Points
The U.S. Treasury yesterday sold $11 billion worth of 30-year bonds for an average yield of 6.43 percent, more than two-tenths of a percentage point higher than they were late last month before the Federal Reserve raised short-term term rates in a precautionary move against inflation.</br></br>The continued rise in long-term rates helped undermine stock prices yesterday as the Dow Jones average of 30 industrial stocks fell 36.58 points to close at 3895.34.</br></br>At that level, the average has recovered only about one-fourth of the 96-point loss it suffered a week ago when the Fed announced its decision to raise short-term rates by a quarter of a percentage point.</br></br>The Fed and the Clinton administration had hoped long-term rates would rise little if at all following the central bank's action. Most economists believe long-term rates have more of an impact on the economy than short-term rates because they affect investment decisions such as whether to buy a home or new equipment for a business.</br></br>This week's quarterly Treasury auction of notes and bonds probably has caused rates to be firmer than they otherwise would be, leaving analysts to say yesterday that it is still too early to judge whether long-term rates will keep their gains.