NEW YORK, April 27: US Treasuries rose on Friday as the seventh stock slide in eight days and weak orders and business investment trends in the first quarter fostered doubts about the durability of the US recovery.

The main evidence of those doubts was the market’s dismissal of ostensibly strong 5.8 per cent first-quarter gross domestic product growth. The economy grew just 1.7 per cent in the previous quarter.

Reflexive selling on the strong GDP headline quickly faded as investors focused on a downtick in a consumer sentiment report and pronounced weakness in key areas of the GDP data — namely an 8.0 per cent drop in durable goods orders, the biggest such decline since the first quarter of 1991, and a 5.7 per cent fall in business investment spending.

There were concerns about the outlook for business investment spending and people were left with the idea that risks to the recovery are much greater than thought, said Dominic Konstam, rate strategist at Credit Suisse First Boston.

Double-dip is the buzzword of the day, he said, referring to the idea that the economy could revisit recession.

The pullback in consumer sentiment recorded by the University of Michigan’s April consumer sentiment index also niggled at investors’ confidence in economic recovery. That sentiment, or confidence, is seen as a harbinger of consumer spending, responsible for two-thirds of the economy’s growth.

The confidence numbers ended the (early) selling (on the GDP headline) and brought some buyers back in, said Kevin Flanagan, fixed income strategist at Morgan Stanley.

Investors’ doubts about the recovery — fed by a bleak forecast from General Mills Inc, the largest US cereal maker, and more trouble for Dynegy Corp. caused the stock market to sell off again, steering assets into safe-haven government debt.

The expectation is that with some double-dip risk and stocks going down, the Fed’s not going to (start raising interest rates), Konstam said.

Treasury prices have risen and yields, which move in the opposite direction, have fallen to their lowest levels since early March as the economy has come off the growth peaks scaled in the first two months of the year.

With consumption up 3.5 per cent as expected and yet another decline in capital spending, there’s no sign of the strength in private sector domestic demand that (Fed Chairman Alan) Greenspan says is a prerequisite to tightening, said Christopher Low, chief economist at FTN Financial in New York.

A slew of data for January and February have shown the US economy steaming ahead after the contraction during the third quarter of last year. But many of the gains reflected last year’s huge inventory liquidation, which forced businesses to restock shelves, and first-quarter growth may have come at the expense of expansion later in the year.

The implication from the larger swings in inventories is that it means it will be harder to get stronger GDP numbers in subsequent quarters, said Mark Vitner, senior economist at Wachovia Securities in North Carolina.

Analysts do not expect consumer spending to grow much in coming months because demand held up strongly throughout the recession in 2001 and in the first three months of this year.

In late trade, the Dow Jones industrial average, the broader Standard & Poor’s 500 Index, and the technology-laden Nasdaq Composite Index were all lower with the Dow much below 10,000 and the Nasdaq well below 1700.—Reuters