International Tensions Drive Market Lower

Stock prices edged lower Tuesday in a market quieted by combat between the United States and Libya and by uncertainty over the nation’s economic health.

The Dow Jones average of 30 industrials closed down 4.43 at 1,778.50.

Declining issues outnumbered those advancing on the New York Stock Exchange by about three to two. Big Board volume totaled 139.25 million shares, falling from 143.81 million on Monday.

The market shrugged off government reports that U.S. consumer prices fell 0.4% and durable goods orders dropped by 0.5% in February.

Some Traders Cautious

Some analysts said many investors believed that recent statistics indicated that the nation’s economy was not responding well to the stimulative effects of low interest rates and low inflation. As a result, they were waiting for further indicators before taking strong buying positions.

The outbreak of fighting between the United States and Libya prompted an early sell-off by investors who already were uneasy about the strength of the bull market and wanted to determine the course of the conflict from the sidelines, analysts said.

“Libya is not significant in itself, but in a fragile market condition it could be the extra straw that breaks the camel’s back,” said Monte Gordon, vice president and director of research for Dreyfus Corp. in New York.

“The market needs to be constantly reassured, and this (Libyan) thing is just asymmetrical.”

Oil stocks were mixed as traders sorted out the effects of the Organization of Petroleum Exporting Countries’ inability to agree on a plan to boost oil prices.

Amoco fell 5/8 to 58 3/8, Exxon was up 1/8 to 55 1/8, Occidental Petroleum fell 3/4 to 24, Mobil was down 7/8 to 28 5/8 and Chevron fell 1/8 to 36 7/8.

Auto Stocks Gain

Stocks of the major auto makers were up despite reports that domestic new car sales slumped 17.2% in mid-March. Ford rose 2 1/2 to 83, GM gained 1 3/8 to 86 1/8 and Chrysler rose 1 1/8 to 46 5/8.

Eastern Airlines dropped to 8 3/8 and led the NYSE most active list as 2.72 million shares changed hands, including a 2-million-share block at 8 5/8.

In heavy trading, Navistar rose 1 to 9 5/8. Several Wall Street investment firms recommended buying the stock.

Ashland Oil was up 3 3/4 to 52. The company said Tuesday that the Belzberg family of Canada held more than an 8% stake in Ashland.

Manufacturers Hanover rose 1 to 54 in heavy trading. The nation’s fourth-largest bank holding company said it had agreed to sell its mortgage banking subsidiary for $260 million.

Alamito was up 9 to 147 in American Stock Exchange trading. Megawatt Corp. and Ventana Electric on Tuesday increased their bids to acquire Alamito, which also has two other suitors.

Gerber Active

Gerber gained 2 1/8 to 45 7/8 in active trading. Gerber said it was dropping a $150-million suit against Maryland officials who banned statewide sales of some Gerber baby foods after consumers reported finding glass in the product.

Among active blue chips, IBM was down 7/8 to 148, AT&T; was down to 22 1/8, Union Carbide fell 3/8 to 20 3/4 and Eastman Kodak was up 1 3/4 to 61 5/8.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,476, compared to 2,451 on Monday.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 165.27 million shares.

The Wilshire index of 5,000 equities closed at 2,411.410, down 7.531.

Standard & Poor’s index of 400 industrials fell 0.57 to 259.59, and S&P;’s 500-stock composite index was down 0.61 to 234.72. The NYSE’s composite index fell 0.32 to 135.22.

At the American Stock Exchange, the market-value index fell 1.20 to 266.52.

The NASDAQ composite index for the over-the-counter market closed at 369.88, down 1.39.

Government Bonds Rise

In the credit markets, long-term government bond prices rose, responding to a government report that confirmed that weak oil prices have driven inflation down. Interest rates made minor movements.

The bond market also got a lift from the good reception given the Treasury’s new four-year notes. The Treasury’s auction produced an average yield of 7.29%, down from 8.43% at the last auction on Dec. 31, 1985, and the lowest since 6.84% on Sept. 7, 1977.

The Treasury received $26.8 billion in bids and sold $7 billion in notes.

Thomas J. Sowanick, senior fixed-income strategist at Merrill Lynch, said traders had expected to see declining inflation due to the price collapse in international oil markets.

So, their reaction to the Labor Department report that the consumer price index tumbled 0.4% in February was fairly subdued, he said.

The clashes between the United States and Libya created a nervous mood in the bond market, but traders detected no heavy buying of government securities, as sometimes happens in times of international tension.

The Commerce Department’s durable goods report met with little surprise.

Yields on three-month Treasury bills finished at 6.40%, up one basis point from late Monday’s level. Six-month bills and one-year bills each rose one basis point to 6.45% and 6.51%, respectively.

The yield on the benchmark 30-year Treasury bond stood at 7.90% late Tuesday, down slightly from 7.92% late in the previous session.

In the secondary market for Treasury securities, prices of short-term governments were unchanged to up by 1/16 point, intermediate maturities rose by 1/16 point to 13/32 point and long-term issues gained by 5/16 point to 1/2 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials and utilities finished unchanged in light dealings.