The stock market edged upward Friday in a lukewarm response to falling interest rates in this country and abroad.
Analysts said the market had apparently anticipated some of the latest interest-rate reductions with its rise to record highs in the first two months of 1986.
The Dow Jones average of 30 industrials rose 3.23 to 1,699.83, cutting its loss for the week to 9.23 points.
Volume on the New York Stock Exchange came to 163.23 million shares, against 158.99 million on Thursday.
On Friday morning, the Federal Reserve cut its discount rate to 7% from 7.5% after the West German and Japanese central banks had posted reductions in their comparable rates. The discount rate is the charge set by the Fed on loans to private financial institutions.
Shortly after the Fed's move, several large banks lowered their prime lending rates to 9% from 9 1/2%.
As pleased as investors might have been by this sequence of events, analysts said some of them were also considering the possibility that it might be the last of the big news on lower rates for a while.
Unemployment Jumps to 7.3%
Brokers also noted that traders were showing a continued reluctance to buy beyond the 1,700 level in the Dow Jones average, which was briefly surpassed at the end of February.
The markets were confronted with one piece of unexpected news--the Labor Department's report that the unemployment rate jumped to 7.3% from 6.7% in February. However, the department said a significant part of the increase stemmed from special factors.
One depressant on stock prices was talk of possible dividend reductions in the energy sector, which has been hurt by falling oil prices. Atlantic Richfield fell 2 1/8 to 49 5/8, Amoco 1 to 55, Chevron 3/4 to 35 and Mobil 1 3/8 to 26 5/8.
Occidental Petroleum, which declared Thursday that it has no plans to cut its dividend this year, nevertheless dropped 1 to 23 1/8.
Among bank stocks, Citicorp rose 7/8 to 54, Chemical New York 2 to 49 1/2, J. P. Morgan 2 5/8 to 74 3/8 and Manufacturers Hanover 5/8 to 49 3/4.
Lear Siegler gained 75 cents to close at $57.25 on unusually heavy volume. Rumors have circulated that the company is a takeover target. "All we know are the rumors, and we are not going to comment on rumors," Lear Siegler Vice President Jay German said.
Trans World Airlines, faced with a strike by flight attendants, was unchanged at 16 5/8.
Housing Issues Gain
Home-building and building materials issues were broadly higher, continuing to benefit from recent reports of strength in housing starts and new home sales. National Homes gained 1 1/8 to 7 3/4, Scotty's Inc. 1 5/8 to 17, General Homes 1 1/8 to 10, Lennar 1 1/8 to 19 1/8 and Kaufman & Broad 5/8 to 25 1/2.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,956, compared to 3,267 on Thursday.
In the overall tally on the Big Board, advancing issues outnumbered declines by about nine to eight. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 190.28 million shares.
The Fed's discount-rate reduction and the unexpectedly big jump in the jobless rate pushed short-term interest rates down and bond prices higher.
By the time trading ended for the day in New York, yields on three-month Treasury bills were down four basis points to 6.66%. Six-month bills dropped six basis points to 6.60%, and one-year bills slid four basis points to 6.63%.
In the market for corporate securities, industrials rose 1/2 point in busy trading and utilities were up point in average volume.