Market Gives Up Most of Rally; Dow Gains 2

From Times Wire Services

Stock prices, which drifted lower during most of the session Tuesday, spurted late in the day, then fell back.

Trading, although uncertain, was active.

The market's best-known indicator, the Dow Jones average of 30 industrials, managed to finish with a gain of 2.32 points at 1,291.85.

But losers outpaced gainers by eight to seven among New York Stock Exchange-listed issues.

"The market looks a trifle tired. You're really suffering from that aftermath of the January and February explosion," said Larry Wachtel of Prudential-Bache Securities. "Lately it has been sporadic, bumping up one day and down the next day."

He added: "The one fear that the Street has is that the Fed is going to tighten and that (interest) rates are going to go higher."

The Dow Jones average's record high was set just this past Friday, when it closed at 1,299.36. The indicator has surpassed 1,300 at least four times since late January but has never closed above it.

In Tuesday's economic news, the government reported that orders to U.S. factories dropped 0.9% in January, marking the seventh decline in the last 10 months.

Also in Washington, the Defense Department suspended part of its huge annual payment to General Dynamics, citing evidence that the largest U.S. defense contractor billed the government for unauthorized expenses. General Dynamics fell 2 3/8 to 80.

Oil Issues Active

The session's volume leader was Phillips Petroleum, which was down 7/8 at 49. The company said Monday that it had persuaded New York financier Carl Icahn to drop his $8.06-billion takeover bid. Phillips agreed to borrow $4.5 billion to buy back 72.5 million shares of its stock with securities valued at $62 a share.

Several other oil issues also were actively traded. Unocal was up 2 3/8 at 47 7/8 and Mesa Partners was up 3/4 at 19 1/8. Investors speculated that T. Boone Pickens, Mesa's chairman, soon would make a bid for Unocal, in which he already holds a 9.7% stake.

Mobil was up 1/2 at 30, Occidental Petroleum was down 1 1/8 at 28 1/8, and Texaco lost 1/8 to 35 1/2.

Also actively traded was American Natural Resources, up 1 1/2 at 61 1/2. A federal judge Tuesday refused to temporarily deny American Natural Resources the option of using Michigan courts to block or delay a $2.2-billion hostile takeover bid by Coastal.

Among the day's bigger gainers was Alexander & Alexander, which jumped 2 3/8 to 30.

On the downside, Teledyne fell 6 to 264 3/4 and Texas Instruments shed 1 1/8 to close at 109 1/2.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 140.52 million shares.

Big Board volume totaled 116.37 million shares, against 102.08 million in the previous session.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,163, compared to 1,919 on Monday.

Bond prices rose as short-term interest rates fell, with long-term government issues climbing more than 1/2 point in price.

Interest Rates Down

The closely watched federal funds rate, the interest on overnight loans between banks, traded at 8.375%, down from 8.688% late Monday.

Yields on three-month Treasury bills fell 4 basis points to 8.68%. Six-month bills dropped 7 basis points to 8.92% and one-year bills were off 6 basis points at 9.05%. A basis point is one-hundredth of a percentage point.

Yields on 30-year Treasury bonds fell to 11.82% from 11.90% late Monday.

In the secondary market for Treasury bonds, prices of short-term governments rose 6/32 point, intermediate maturities climbed 10/32 point and long-term issues were up 20/32 point, according to the investment firm of Salomon Bros. Inc.

The movement of a full point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

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

Among tax-exempt municipal bonds, general obligations edged up 1/8 point and revenues bonds were up point. Trading also was light.

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