Blue Chips Lag Again as Market Posts Gains

The stock market closed out its best month since last summer with some further gains Thursday, although blue-chip issues lagged behind once again.

The Dow Jones average of 30 industrials slipped 1.11 to 1,286.77.

Advances slightly outnumbered declines on the New York Stock Exchange, making it 19 sessions in a row that gainers have held the edge.

The Dow Jones industrial average finished January with a net advance of 75.20 points for its best monthly showing since it took a 109.10-point jump last August.

Furthermore, analysts said the relatively narrow sample of stocks in the Dow substantially understated the market’s strength during the past month.

From the end of December through Wednesday’s close, an index compiled by Wilshire Associates of the market value of 5,000 stocks climbed $141.56 billion.

After an advance of that magnitude, brokers said, it was logical to expect investors to want to cash in some of their gains.

However, no concerted selling pressure developed, despite the news that the government’s index of leading economic indicators dropped 0.2% in December.

The Investment Company Institute said assets of money-market mutual funds dropped $2.76 billion in the week ended Wednesday. Wall Streeters said it appeared that a good portion of that money departed for the stock market.

Unocal climbed 4 to 42 amid intense takeover speculation, and Mesa Petroleum, said to be a possible bidder for Unocal, rose 1 to 18 3/8. The two companies declined to comment on the rumors.

Other oil issues were mostly higher, with Standard Oil of Indiana up 3/4 at 57 3/8, Texaco up 5/8 at 34 7/8, Exxon up at 48 and Atlantic Richfield higher at 45 1/2.

Meanwhile, the federal funds rate, the interest on overnight loans between banks, traded at 8.75% percent, against 8.625% Wednesday.

Analysts said the recent upturn in the federal funds rate, and the Fed’s failure to add reserves to the banking system to push that rate lower, has worried traders.

Also adding pressure on the market was a Treasury Department announcement late Wednesday that the government plans to sell $19 billion in notes and bonds next week to raise $11 billion in new cash and to redeem maturing securities. That was more than traders had been expecting.

Yields on 30-year Treasury bonds rose to 11.23% from 11.15% late Wednesday and 11.11% Tuesday, which was the lowest level since mid-1983.

In the secondary market for Treasury bonds, prices of short-term governments fell point, intermediate maturities fell 3/8 point to 1/2 point and long-term issues were off 3/4 point, according to the investment firm of Salomon Bros. Inc.

In corporate trading, industrials and utilities fell point in light trading.