Stocks Mixed in Heavy Trading; Dow Off 1.87

The stock market posted some broadly based gains Tuesday despite a decline in the blue chips on the fourth heaviest day of trading ever on the New York Stock Exchange.

Analysts blamed a bout of profit taking for eroding what had started out as a replay of the previous session’s robust advance.

The Dow Jones index of 30 industrials, which jumped 34.01 on Monday, slipped 1.87 to close at 1,259.50. The index gained more than 10 points in the first hour of trading but then started to slide.

Most broader measurements of the market posted gains, however.

Standard & Poor’s index of 400 industrials rose 0.42 to 196.55, and S&P;’s 500-stock composite index was up 0.25 at 175.48.

At the American Stock Exchange, the market-value index rose 1.63 to 217.32.

The NASDAQ composite index for the over-the-counter market closed at 268.42, up 2.01.

In addition, the Wilshire index of 5,000 equities closed at 1,796.611, up 4.442.

Volume Climbs

Advancing issues outpaced declines nine to seven among issues listed on the NYSE, whose composite index rose 0.16 to 101.28, surpassing the previous closing high established Monday.

Big Board volume was 174.77 million shares, against 146.83 million shares Monday. It was the most active trading day since Oct. 19, 1984, when 186.90 million shares traded hands.

Among issues listed on the NYSE, 284 posted 52-week highs, while only two recorded new lows.

Analysts said the heavy volume indicates that investors are confident that the economy can continue to grow with low inflation. The relatively weak performance in the blue chips, they said, stemmed chiefly from profit taking in the wake of Monday’s big run-up.

“We have had a spectacular run here, and traders feel for the time being that this is enough and they are cashing in their chips,” said Michael Metz, senior vice president for market strategy at Oppenheimer & Co.

Still Much Strength

But John J. Smith, a partner in the brokerage concern Fahnestock & Co., said the market outside the blue chips continues to do well.

“There is still a lot of strength here being spread out over a broader share of the market,” Smith said.

Before the market opened, the federal government revised upward its estimate of fourth-quarter economic growth, to 3.9% from 2.8%.

It said the nation’s gross national product had risen in 1984 by the largest amount since 1951, while a companion measure of inflation rose by the smallest amount since 1967.

“The report had a confirming effect that things were better than some economists had projected three months ago,” said Theodore H. Halligan, senior vice president at the regional brokerage concern Piper, Jaffray & Hopwood.

The news was well received in the bond markets, where prices were up as much as $12 for every $1,000 in face value. Yields on bonds, which move in the opposite direction of prices, fell.

Oppenheimer’s Metz said that, since bonds compete with stocks for investors’ money, continued declines in bond yields will make stocks relatively more attractive.

Among the volume leaders on the NYSE, American Telephone & Telegraph was unchanged at 21, International Business Machines was up 1 3/8 at 129 5/8, Merrill Lynch was unchanged at 30 and Phibro Salomon was down 1 at 36.

American Express fell 5/8 to 38 1/2 despite posting a fourth-quarter profit, in contrast with a loss in the same period a year ago.

In the technology sector, Data General was up 1 at 62 3/8, Digital Equipment was up 2 at 113 3/4, Texas Instruments was up 2 7/8 at 129 5/8 and Sperry was up 1 3/4 at 45 1/2, but Hewlett Packard was down 1 at 35 1/8 and Burroughs fell 1 1/2 to 61 3/4.

Prime Computer, which introduced a new line of of computers, was up to 17 7/8.

RCA, which reported its fourth-quarter net income jumped 37%, rose 1/8 to 38 1/2.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 203.83 million shares.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,431, compared to 2,986 on Monday.

Yields on short-term securities fell in Tuesday’s Treasury auctions, sending interest rates to their lowest levels in two years.

In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point to point, intermediate maturities rose 3/8 point to a full point and long-term issues were up 1 3/8 point, according to the investment firm of Salomon Bros. Inc.

CH