Wall Street ended a roller-coaster session Wednesday with mixed results as the volatile effect of computer-driven trading programs was exaggerated by relatively light volume.
The Dow Jones index of 30 industrials, off more than 20 points in early trading and up more than 20 at its afternoon peak, finished with a net loss of 3.82 at 1,924.73.
Amid the volatility, investors cheered the U.S.-Japanese reaffirmation of economic cooperation announced in Washington but worried about the U.S. trade deficit. The figures for November are due Friday.
The reduced volume has been blamed on investor hesitancy to tackle large stock positions before the release of the trade figure. If past reaction of the financial markets to the monthly numbers is any guide, Friday's figure could jolt the currency markets and have an equally dramatic effect on the dollar-sensitive stock market.
The Dow suffered a 30-point setback in early trading Wednesday as traders dumped stocks in favor of the cheaper futures contracts that are linked to stock indexes.
That combined with a weaker dollar set the market up for what appeared to be another big down day.
But those declines evaporated late in the day as the dollar firmed on positive comments about the U.S. currency from West Germany's central bank president, Karl Otto Poehl.
Analyst Larry Wachtel of Prudential-Bache Securities said the market was encouraged by Wednesday's meeting between President Reagan and Japanese Prime Minister Noboru Takeshita.
But the dominant factor in the market all week, and again Wednesday, was the effect of computerized program activity.
Index an Aberration
"They make the Dow swing in a crazy fashion and it makes the index an aberration of what is really happening in the market," Wachtel said.
Advancing issues outnumbered declines by about 8 to 7 among New York Stock Exchange issues. A relatively thin 154 million shares changed hands, down from 165.73 million in the previous session.
Insurance stocks also moved ahead on takeover related news. Earlier Wednesday, B.A.T. Industries, the large British conglomerate, launched a takeover attempt against Farmers Group Inc., whose stock rose 11 to 54 in over-the-counter trading.
That provoked a sympathy rise by other insurance stocks on speculation that other bids could emerge.
Chubb Corp. gained 2 1/8 to 56 3/4, Aetna Life & Casualty Co. rose 1 7/8 to 46 and Travelers Corp. climbed 1 to 36 5/8.
Texaco fell 1 1/2 to 37 1/2. The stock stood at 40 1/2 when trading in it was halted on the NYSE for an announcement by the company that it may face claims for back taxes of as much as $6.5 billion.
Pennzoil, which has agreed to a proposed settlement with Texaco of the two companies' long legal battle, dropped 1 3/4 to 66 3/4.
On the Tokyo Stock Exchange, the Nikkei average of 225 selected issues lost 300.06 points, closing the day's trading at 22,324.99.