Market Effort at Rally Fizzles; Dow Sinks 5.99

Stock prices drifted down in a desultory session Tuesday amid uncertainty about the outlook for interest rates and the economy.

The Dow Jones average of 30 industrials yielded its modest early gains and finished with a loss of 5.99 points at 1,865.78.

The weakness extended to the broader market where declines outnumbered advances by about five to three on the New York Stock Exchange. The NYSE composite index fell 0.80 to 140.37.

Volume on the Big Board expanded to 123.09 million shares from 112.12 million Monday.

Some weak economic news initially helped stocks and bonds, but the stock market failed to sustain the upward momentum.

Technology Stocks Lower

Technology stocks sagged. Market leader International Business Machines skidded 1 5/8 to 146 7/8.

Upjohn was a big loser, tumbling 4 7/8 to 96 3/4. The Food and Drug Administration said the company has misled the public by suggesting its experimental hair-growing product, Minoxidil, is more effective than is accepted by the federal watchdog agency.

American Telephone & Telegraph closed off 1/8 at 24 7/8. The company and a union representing 155,000 striking telephone workers reached a tentative settlement on a new contract.

Some gainers included Safeway, which rose 2 5/8 to 50 1/2 and was among the most heavily traded issues, and NL Industries, up 1 to 14 1/8; Orion Pictures, up 1 1/2 to 17 5/8, and McDonalds, up 2 5/8 to 103 7/8.

RJR Nabisco fell 5/8 to 48 3/8. Late Monday, the Federal Trade Commission charged that its R. J. Reynolds Tobacco subsidiary misrepresented the purpose and results of a government study on smoking and health.

In the credit market, bond prices wound up with modest gains.

The Treasury’s key 30-year bond rose 11/32 point, which lowered its yield to 7.41% from 7.45% late Monday.

Prices of shorter-maturity governments term government maturities and corporate and municipal issues posted similar gains, while short-term interest rates fell slightly.

In the secondary market for Treasury securities, prices of short-term governments rose by 1/8 point to 7/32 point and intermediate maturities were up by 9/32 point to 19/32 point. The 20-year bond gained 5/8 point.