Stocks Gain in Erratic Session; Dow Adds 16.91 : Light Trading Prompts Analysts to Be Cautious

The stock market spun into a late rally Tuesday after seesawing in a directionless session marked by low volume and investor caution.

The Dow Jones index of 30 industrials gained 16.91 to 1,997.51.

Advancing issues outnumbered losers by about 3 to 2 on the New York Stock Exchange, with 911 up, 585 down and 467 unchanged.

Big Board volume totaled 135.29 million shares, against 182.24 million Monday. The NYSE’s composite index rose 1.12 to 146.29.

The Dow index dipped into negative territory at midday as traders moved to cash in on an early technical rally that pushed the key index up about 20 points in the first few hours of activity.

But analysts were reluctant to draw firm conclusions about the market’s overall tone because trading volume remained among the lightest levels so far this year.

“The overriding issue is that the volume is not particularly convincing, and that’s leaving the market fairly directionless,” said Hugh Johnson, senior vice president at First Albany Corp.

Despite a firming dollar and stabilizing bond prices, there was “a lack of strong fundamentals to sustain a move in either direction,” he added.

Analysts said professional traders were the main players in the market, with individual and institutional investors remaining on the sidelines while they await clearer signals on the state of the economy.

Woolworth Stock Jumps

Traders are more interested in capitalizing on short-term moves, while investors typically take a longer-term view of the market, noted Michael Metz, a market strategist at Oppenheimer & Co.

“This is one of those low-conviction markets where traders dominate the arena,” he said.

Much of the session’s activity centered on F. W. Woolworth, a component of the Dow index and the most active issue of the day. Woolworth finished up 2 1/2 at 56 5/8 after jumping 8 7/8 Monday, when Dart Group said it was interested in acquiring a stake in the retailer.

Woolworth had been up as much as 4 during the session, but fell amid profit taking. Analysts said the stock’s movements had a fairly significant impact on the Dow throughout the day.

Among other actively traded issues, International Business Machines was unchanged at 107 1/2; General Electric was up 1/2 to 40 5/8, and Pillsbury rose 3/4 to 44 1/2.

Koppers, the target of a takeover bid from Beazer, fell 1 to 56.

Airline issues were mixed amid analysts’ speculation that carriers would move to match lower discount fares announced by Texas Air’s Eastern and Continental units. AMR Corp. fell 1 1/8 to 42 1/8; Delta fell 3/4 to 51; Allegis rose 3/8 to 82 7/8, and Pan Am rose 1/8 to 2 7/8.

The Wilshire index of 5,000 equities closed at 2,578.459, up 19.670.

Indicators Gain

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 158.46 million shares.

Standard & Poor’s index of 400 industrials rose 3.02 to 300.17, and S&P;’s 500-stock composite index was up 2.42 to 258.51.

The American Stock Exchange market value index rose 0.06 to 295.07. The NASDAQ composite index closed at 373.41, up 1.52.

In Tokyo, the Nikkei 225-share average, which gained 53.17 Monday, slipped a modest 19.94 Tuesday to move to 26,315.35 at the end of trading.

In London, the Financial Times 100-share index dropped 4.9 to close at 1,737.6.