Stocks Mixed in Lackluster Trading; Dow Declines 7.94

Stock prices closed mixed today, capping a dull trading session that market analysts attributed to uncertainty over the economy and a bit of profit taking among the blue chips.

The Dow Jones average of 30 industrial stocks vacillated in a narrow range during much of the session before closing down 7.94 points at 1,838.13.

Some said the market was still recovering from the record 45.75-point drop Monday in the Dow Jones industrial average, which made many investors nervous--although the correction was considered largely technical in nature.

Others said Wall Street was having a mixed reaction to Commerce Department reports that showed retail sales fell 0.1% in May and capital investment plans will decline 1.3% this year.

The reports compounded evidence that sluggishness persists, especially in the consumer spending area, which accounts for two-thirds of overall economic activity.

Some investors believed that this pointed to lower corporate profits and cashed in on their stocks, while others thought it would likely mean declines in interest rates, thereby making stocks more attractive.

Bond prices rose and interest rates fell today as the credit markets welcomed the reports on retail sales and business spending as signs of economic weakness that could keep credit costs from going up.

At midday in New York, the Treasury’s key 30-year bond sported a gain of about 1/2 point, or $5 for each $1,000 in face amount. Its yield declined to 7.68% from 7.72% late Wednesday.

In the secondary market for Treasury bonds, prices of short-term and medium-term governments were up by 3/32 point to 1/2 point. The 20-year bond rose 7/16 point, according to the investment firm of Salomon Bros.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, stood at 114.46, up 0.38 from Wednesday’s late level. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 3.27 to 1,200.70.

In corporate trading, industrials rose point while utilities were largely unchanged in quiet dealings. Among tax-exempt municipal bonds, general obligations rose 3/8 point and revenue bonds were up 1/8 point in light trading.

Yields on three-month Treasury bills declined four basis points to 6.28%. Six-month bills fell five basis points to 6.39%.