Stocks Fall for 3rd Day in Row; Dow Off 2.91

The stock market gave ground for the third straight session Wednesday in selling ascribed to profit taking.

The Dow Jones average of 30 industrials dropped 2.91 to 1,348.90, bringing its loss over the past three sessions to 10.64 points.

Volume on the New York Stock Exchange came to 128.60 million shares, against 143.63 million Tuesday.

Oil stocks came on strong near the close on signs that the Organization of Petroleum Exporting Countries might be able to avert any immediate sharp decline in prices.

Exxon climbed 1 to 52 7/8, Texaco rose 1 to 36 3/4, Unocal rose 1 to 30, Mobil gained 3/4 to 30 7/8 and Phillips Petroleum rose 1/2 to 12 7/8, all in active trading.

At the same time, stocks of airlines, which are large consumers of fuel refined from petroleum, took a dive. UAL fell 1 1/2 to 54 1/2, AMR fell 1 1/8 to 46 7/8, Delta dropped 1 to 49 1/8 and Pan Am dropped 1/8 to 7.

Gerber Products fell 1 7/8 to 35. The company reported lower earnings for the quarter ended June 30, and it said its results for the current quarter were expected to show another decline from year-ago levels.

Profit takers were notably active in the pharmaceutical group, which has been strong lately as a falling dollar raised hopes of improved earnings in the industry. Upjohn fell 2 to 117 3/8, Warner-Lambert dropped 2 1/8 to 43 3/4 and SmithKline Beckman fell 1 to 69 3/8.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,508, compared to 2,955 on Tuesday.

The federal funds rate, the interest on overnight loans between banks, traded at 7.438%, down slightly from 7.675% late Tuesday.

In bond markets, prices drifted lower and interest rates rose as the government sold $9.36 billion in new two-year notes.

The Treasury Department sold the two-year notes at an average yield of 8.98%, up from 8.51% at the previous two-year auction on June 19. It was the highest yield for a new issue of two-year notes since the 9.13% on May 22.

In the secondary market for Treasury bonds, prices of short-term governments were off 5/32 point, intermediate issues dropped 11/32 point and long-term issues fell 12/32 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.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.26 to 150.52 from Tuesday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 2.46 to 1,108.29.

Among corporate bonds, industrials and utilities were down 1/2 point in light trading, Salomon Bros. said. Among municipal issues, general obligations were off 1/2 point and revenue bonds were down point in moderate trading, the investment firm said.

Yields on three-month Treasury bills were unchanged at 7.24%. A basis point is one-hundredth of a percentage point. Six-month bills rose 4 basis points to 7.38%, and one-year bills were up 5 basis points at 7.49%.

Yields on 30-year Treasury bonds edged up to 10.61% from 10.58% late Tuesday.