Market Fights Profit Taking Wave : Dow Closes 1.16 Lower After Trimming Early Losses

The stock market slipped off its post-crash peak Tuesday but showed enough spunk to hold most of its recent gains.

The Dow Jones industrial index of 30 stocks bounced off its lows late in the day, closing down 1.16 points at 2,070.46.

With an hour to go, the blue chip index had been down more than 13 points, but traders took the opportunity to buy stocks, pushing the Dow near Monday’s close of 2,071.62, its high-water mark since the Oct. 19 collapse.

Stocks declining in price outpaced gainers by 7 to 6 on the New York Stock Exchange.

Big Board volume totaled 199.99 million shares, against 236.05 million in the previous session. The NYSE’s composite index dipped 0.28 to 150.18.

But takeover activity, both real and rumored, kept the profit taking from gaining momentum and making any dent in the 170 points accumulated in the Dow index over the past three weeks.

“Considering the lavish advance Monday, this was a perfectly respectable little pullback,” said Michael Metz, a market strategist with Oppenheimer & Co.

Some analysts contend that the market’s ability to hold at its current level, just a point below the post-Oct. 19 high of 2,071.62 reached the day before, is a healthy sign.

Investors are looking for stability more than anything else, one analyst said. “Real buyers are gradually coming back into the market,” Metz said.

“Investors on the sidelines are now less nervous about another big decline and more nervous they will miss an advance,” Metz added.

Federated Gains

Others were not so sure. Hugh Johnson, chief investment officer for First Albany Corp., characterized the market as “almost lifeless,” adding that uncertainty about the economy was still a drag on trading.

A batch of government statistics released Tuesday failed to satisfy the market’s curiosity about the economy’s health.

The Commerce Department said its chief economic forecasting gauge dropped a sharp 0.6% in January, but the December reading for the index of leading economic indicators was revised from a 0.2% drop to a 0.3% gain.

The government also said construction spending tumbled 2.9% in January, the biggest decline in 10 months. But as was the case with the leading index, the drop followed a revised 0.4% increase in December.

Among the most active stocks on the NYSE, Federated Department Stores gained 1 to a new high of 67 3/4 following R. H. Macy’s offer of $73.80 a share for about 80% of the retailing company’s outstanding shares.

J. P. Stevens, which received a revised buyout offer from a management group and said other parties had expressed interest in the company, jumped 6 to 54 1/2, also a new high.

Other results were mixed. Sears, Roebuck was up 1/2 to 38, General Electric was down 1/2 to 45, Pillsbury rose to 37, Bethlehem Steel rose 7/8 to 21 3/8, Atlantic Richfield dropped 7/8 to 76 and International Business Machines was down 1/2 to 117.

In London, the Financial Times 100-share index finished up 13.1 points at 1,781.9 in quiet trading, due in part to Wall Street’s lower opening on Tuesday. In Tokyo, the Nikkei 225-share index rose 193.09 to finish at 25,435.90, the 14th rise in 15 sessions.