Dow Ekes Out 3.22 Gain in Light Trading

Stocks closed mixed Tuesday, failing to build convincingly on the big advances of the prior two sessions.

Volume was light as traders awaited fresh developments from the Middle East.

The Dow Jones industrial average rose 3.22 to close at 2,614.85 after soaring 78.71 on Monday, its best performance in more than 10 months.

Coupled with the Dow’s 49-point advance Friday, the index has risen 131 points in the past three sessions, or 5.3%.

In the broader market Tuesday, advancing issues outnumbered decliners by a margin of about 5-to-4 in nationwide trading of New York Stock Exchange-listed stocks, with 837 up, 664 down and 492 unchanged. But Big Board volume was a light 127.65 million shares, versus 160.15 million Monday.

“We had two magnificent days up--Friday and Monday--and the market is acting as if both the buyers and the sellers are exhausted and out of conviction,” said Alfred Goldman, director of technical research at A. G. Edwards.

“It’s going to take some news, good or bad, to get the market really shaking in one direction or another short term,” he said.

“I guess there’s hope out there that we’re coming closer to some sort of a breakthrough on the Mideast situation,” said Ron Doran, director of institutional trading at C. L. King & Associates. “If this thing gets defused, there will be an upturn and (investors) don’t want to miss it.”

Iraqi President Saddam Hussein’s decision to allow women and children hostages to leave Iraq today had little impact on stock prices, analysts said.

“This is just a case that there’s no need for investors to make a commitment,” said Dennis Jarrett, strategist at Kidder Peabody.

Still, Goldman said he was encouraged that most stocks held their ground despite another rise in oil prices.

Among key indexes, the Standard & Poor’s 500 lost 0.10 to 321.34, but the NASDAQ over-the-counter composite gained 1.59 to 382.86. Buying was strongest among many high-tech OTC issues.

Market highlights:

* Oil stocks accounted for most of the Dow’s gain. Chevron rose 1 1/8 to 75 5/8, Texaco added 1 3/4 to 62 3/4 and Exxon rose 1/2 to 50 1/8. Also, Arco gained 1 7/8 to 134 1/8 and Amoco jumped 1 3/8 to 55 3/4.

* Among rebounding tech issues, FileNet soared 2 to 15 1/4, Microsoft jumped 2 1/8 to 62 7/8, Optical Radiation added 1 3/4 to 26 1/2 and Digital Equipment rose 1 7/8 to 65 1/2.

* GM gained 1 1/8 to 40 1/4 on news that the UAW had selected GM as its strike target. GM said it was pleased to have the chance to lead contract negotiations for the auto industry, rather than have to follow the lead of Ford or Chrysler.

* LA Gear jumped 7/8 to 15 1/4 after trading as high as 16 1/4 on vague buyout rumors that named Bennetton as a possible bidder.

* Bargain hunting seemed to dry up in the food and drug groups. General Mills rose 1/2 to 85, and Lilly gained 1 1/8 to 73 1/2, but Heinz lost 3/8 to 32 1/4, and Bristol Myers slipped 1/8 to 59 3/8. Health-care facility operators, however, were strong. Humana rose 1 1/8 to 44 7/8, PacifiCare added 3/4 to 16 1/2 and Salick Health gained 1/2 to 8.

* In-Store Advertising tumbled 7 1/2 to 7 1/4 after its announcement that 1990 revenue would fall significantly short of forecasts.

In Tokyo, stocks continued their broad advance, picking up from Monday. Falling oil prices and a stronger yen fueled advances, but persistent market rumors of trouble in the Persian Gulf capped gains. The 225-share Nikkei average closed up 569, or 2.3%, to 25,710.76.

Shares in London lost some of their sharp early gains but ended higher on the day after strong rallies overseas the previous day. At the close, the Financial Times 100-share index was up 39.7, or 1.9%, at 2,126.1. However, in Frankfurt, profit taking knocked shares sharply lower after Monday’s record 6% rise. The 30-share DAX index of leading West German shares ended 36.91 lower at 1,617.89.

CREDIT Bond Prices Decline as Traders Await Cue Bond prices slipped in lackluster trading as the market tried to make sense of the Mideast situation, traders said.

The Treasury’s key 30-year bond, which shot up nearly $16 per $1,000 in face amount Monday, fell 15/32 point, or $4.69 per $1,000 face value. Its yield rose to 9.04% from 8.99% late Monday.

The Iraqi crisis has sent the yield on the so-called long bond to its highest levels in more than a year. The figure is important because it is a benchmark for mortgage rates.

Bond traders said they were watching the Iraqi situation closely and its effect on oil prices, but there was little clear direction for the market.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8%, unchanged from late Monday.

CURRENCY Quiet Session Leaves Dollar Mixed in U.S. The dollar turned mixed in domestic trading after finishing mostly higher overseas, but much of the day’s activity centered on other currencies.

Trading was relatively quiet as fears of a worsening Middle East conflict receded. “Nothing has happened (in the Persian Gulf) so far, so the market is beginning to think it is less of a concern,” said Linda McLaughlin, a trader at Chemical New York Capital Markets Group. “The market is quite comfortable not to worry.”

The dollar closed in New York at 143.75 Japanese yen versus 144.25 Monday. It was the lowest close since 142.95 on Jan. 29. But the dollar rose to 1.556 German marks from 1.551 Monday.

COMMODITIES Grain and Soybeans ‘Trade on Both Sides’ Prices of grain and soybean futures were mixed in light trading on the Chicago Board of Trade, as spot oil prices rebounded and gold and silver lost more ground. (See related stories.)

Analysts said traders were taking a wait-and-see attitude after Monday’s sharp decline of prices in the grain market. The selloff was tied to the drop in crude oil and precious metals prices.

Elsewhere, cocoa prices plummeted at the Coffee, Sugar and Cocoa Exchange in New York on profit taking and news of beneficial rain in west African growing areas, after sharp gains Friday.

Market Roundup, D8