Stocks Slip; Oil Issues Buck Trend : Dow Off 7.17; Traders Said to Await Earnings Reports

Stock prices settled back a bit Monday as the market drifted through a quiet session.

Energy issues provided one pocket of strength, aided by a continued rise in oil prices.

The Dow Jones index of 30 industrials, up 26.94 last Thursday, dropped 7.17 to 2,429.53. The markets were closed Friday to observe Independence Day.

Volume on the New York Stock Exchange came to 155.01 million shares, against 154.93 million on Thursday.

Analysts said the market got off to a tentative start on the new week as traders looked ahead to the second-quarter corporate earnings reports due to be issued soon.

Hopes are generally high among investors that the figures will show strong gains over the comparable period last year, even though economic growth remains relatively subdued.

Energy Stocks Gain

However, should those expectations not be fulfilled, a good many observers believe the market might be vulnerable to a setback after its rally in late May and June.

Prices rose at the outset Monday after interest rates dropped a bit in the bond market. Later in the day, bonds gave up most of their gains and the stock market’s advance subsided as well.

An exception came in the energy group as the price of crude oil for August delivery climbed 32 cents to $20.93 a barrel on the New York Mercantile Exchange.

Texaco jumped 3 1/2 to 44 3/4 on revived speculation that a settlement might be impending in the company’s legal dispute with Pennzoil over its acquisition of Getty Oil. Pennzoil rose 2 3/4 to close at 79 1/2.

Elsewhere in the group, Exxon gained 5/8 to 93 3/8, Amoco rose 1 to 88 1/2, Phillips Petroleum climbed 5/8 to 17 1/2, Chevron added to 62 1/2 and Atlantic Richfield advanced 5/8 to 96.

Among oil service and drilling stocks, Schlumberger rose 1 to 47 1/2, Halliburton gained 1/2 to 38 1/2 and Baker Hughes climbed 5/8 to 25.

Southland Corp. Zooms

Southland Corp. gained 7 to 75 3/4 and led the NYSE active list on turnover of more than 4 million shares. The Thompson family, which controls the company, said it had reached an agreement to buy the stock now in public hands for $77 a share.

Losers in the blue chip sector included General Motors, down 1 at 80; Coca-Cola, down 1 at 43; Philip Morris, down 1 1/8 at 90; Merck, down 2 5/8 at 174 3/4; Eastman Kodak, down 1 1/8 at 85, and American Telephone & Telegraph, down at 28 7/8.

Declining issues outnumbered advances by about 8 to 7 in the overall tally on the NYSE.

In the bond market, the Treasury’s closely watched 30-year bond edged up 1/16 point, or about 60 cents per $1,000 in face value, while its yield slipped to 8.42% from 8.43% on Thursday.

Analysts said bond prices drew a modicum of support from the dollar’s advance against some key foreign currencies, notably the Japanese yen.

Bonds Tracking Dollar

“There’s still a fairly constructive tone underneath the (bond) market,” said Jay Goldinger, an investment banker with the firm Cantor, Fitzgerald & Co. in Beverly Hills. “It is definitely following the dollar.”

Strength in the dollar is often considered positive for the credit markets because it makes dollar-denominated securities, such as bonds and notes, more attractive to foreign investors and keeps inflation in check.

Some traders are concerned, however, that the central banks of the major industrial countries could intervene to stem the dollar’s rise if it hits the key level of 150 Japanese yen. The dollar was quoted late Monday in New York at 148.94 yen, up from 148.85 yen Friday.

In the secondary market for Treasury bonds, prices of short-term government issues declined 1/32 point, intermediate maturities were unchanged to 1/16 point lower and 20-year issues jumped 11/32 point, according to 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.

In corporate trading, industrials and utilities were unchanged in light activity, according to Salomon Bros.

Among tax-exempt municipal bonds, general obligations rose point and revenue bonds were unchanged in light trading, Salomon Bros. said.

Yields on three-month Treasury bills were unchanged at 5.68%. Six-month bills rose 2 basis points to 5.82% and one-year bills gained 1 basis point at 6.25%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 6.675%, down from 6.875% on Thursday.