Market Rally Attempt Fizzles; Dow Dips 0.45

The stock market showed no clear trend Tuesday after an early advance faltered.

However, bond prices rose by as much as $11.25 for every $1,000 in face value in what one analyst said was a response to speculation that inflation will continue at low levels.

The Dow Jones average of 30 industrials, up more than 5 points in early trading, finished with a 0.45 loss at 1,301.52.

Volume on the New York Stock Exchange came to 90.60 million shares, against 85.97 million last Friday.

Declining interest rates have been cited as a primary force behind the rally in stock prices since May 1, and they kept dropping Tuesday.

Though rates are well below their recent peaks, analysts noted, they still are relatively high in comparison to inflation. As long as inflation remains subdued, optimists argue, there is room for further declines in the cost of borrowing money.

Fed Action Helped

The Federal Reserve has apparently given the downward trend in rates some further impetus with the reduction of its discount rate, to 7.5% from 8%, it announced a week ago Friday.

With all that, analysts said, traders appeared to be reluctant to chase after stocks at the lofty levels they have reached. Rather, they seemed inclined to cash in on some of the market’s recent gains.

Brokers also said it was natural for investors to be proceeding warily as they awaited Tuesday night’s message from President Reagan on his plans for tax reform.

Litton Industries, which plans to buy back as much as 35.8% of its stock, climbed 6 1/2 to 83 1/2.

Trans World Airlines was up 1 3/8 at 17 3/4 in active trading. A federal judge denied a TWA request that financier Carl Icahn, who owns about 25% of the company’s stock, be restrained temporarily from buying any more.

Late in the day, the company said it was seeking a friendly merger partner to ward off Icahn’s $18-a-share bid to take it over.

International Controls gained 3 to 28. The company said it received an unsolicited offer from an investor group to acquire it for $27 a share.

Pacificorp led the NYSE active list, up 1/8 at 28 3/4. A 2.5-million-share block of the utility, coal and telecommunications company’s stock changed hands at 28 1/2.

In the overall tally on the Big Board, about six issues declined in price for every five that gained ground.

In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point, intermediate maturities rose by between point and 7/8 point and long-term issues were up 1 1/8 point, according to the investment firm of Salomon Bros. The movement of a 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 rose 3/4 point in moderate trading. Among tax-exempt municipal bonds, general obligations rose point and and revenue bonds were up 1/2 point, Salomon Bros. said.

Yields on 30-year Treasury bonds fell to 10.72% from 10.85% late Friday.