The Hesitation Waltz Provides Market Theme : Dow Up a Fraction After Volatile Session

The stock market finished fractionally higher Tuesday in a volatile session that saw investors hesitate in the face of fresh economic data.

The Dow Jones index of 30 industrials edged up 0.71 point to close at 2,131.22, its fourth consecutive advance. The key indicator gained nearly 77 points in the previous three sessions.

New York Stock Exchange volume came to 166.66 million shares, up from 138.17 million in the previous session.

The market rose sharply at the opening but then faltered, moving in and out of negative territory amid computer-triggered selling.

Leading Indicators Up

Analysts said a strong bond market and a firm dollar helped support equities. The government released fresh evidence of the economy’s strength, which the currency markets embraced as a sign to buy dollars. The bond market, which usually sinks in the face of strong economic signals, also moved sharply higher.

The government said its main forecasting gauge, the index of leading indicators, shot up 1.4% in June, the biggest increase in 18 months. But the gain was partially offset by a downward revision in the May index.

Another government report put the June rise in factory orders at 5.5%--far above market expectations of a 3.5% increase.

Gene Jay Seagle, director of research at Gruntal Financial Inc., attributed the rise in factory orders to a cheap dollar that has made U.S. exports more attractive. “If that were inflationary, the bond market would not have rallied,” he said.

Morry Markovitz, president of Mercury Management Associates, was optimistic about the numbers. “I don’t think there’s a reason to be concerned about it,” he said of the report. “I don’t think employment is rising that fast and I don’t think in the first place that low unemployment is a cause to be concerned about inflation.”

Reluctance Cited

Still, analysts said there was plenty of confusion about what the data would mean in terms of interest rates.

Hugh Johnson, a senior vice president at First Albany Corp., said the overriding sentiment among investors is reluctance. “You get this kind of roller-coaster behavior because investors are skeptical and cautious and digging their heels in,” he said.

“The market looks like it’s struggling to consolidate the gains of last week,” said Marshall Acuff, market strategist with Smith Barney, Harris Upham & Co.

“There was no pronounced leadership looking at the groups of stocks,” Acuff said. “It doesn’t give any confidence to go rushing in, but with the bonds up, it’s hard to be negative.”

Among actively traded Big Board issues, Texaco was up 3/4 at 47 5/8. The oil giant said it would sell its 78% stake in Texaco Canada.

Pillsbury rose 1 5/8 to 38 3/8. Developer Donald Trump revealed he owns 0.4% of the food company and is seeking to boost that stake to 15%.

Elsewhere, NCNB, which has agreed to take over First RepublicBank, jumped 2 7/8 to 27 7/8. Armtek was off at 42 3/8. Mark IV Industries plans to begin a tender offer for Armtek common shares at $40 each.

Elsewhere, IBM was down 1/2 at 125 3/4, and Gillette was off 1 at 36 1/2. Tenneco, the most active issue with more than 10 million shares trading hands, fell 1/8 to 48 3/8 as traders moved to capture the company’s dividend.

Advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 726 issues up, 711 down and 516 unchanged.

The Wilshire index of 5,000 equities closed at 2,705.560, up 0.082 from Monday’s close.

The NYSE index was up 0.02 at 153.54.

Standard & Poor’s index of 400 industrials fell 0.34 to 313.61, and S&P;’s 500-stock composite index was off 0.15 at 272.06.

At the American Stock Exchange, the market-value index fell 0.21 to 306.50. The NASDAQ composite index for the over-the-counter market closed at 387.80, off 0.20.

Stock prices in Tokyo closed at record-high levels Tuesday on speculative buying, but brokers said the session was lackluster, trading volume was thin and the day’s gain quite small.

The 225-share Nikkei index rose 40.02 points, to a record 28,366.33, surpassing the previous record close of 28,342.46 set June 17. Volume was a thin 800 million shares, compared to 950 million shares traded Monday.

On the London Stock Exchange, stocks prices fell in a lackluster session.

The Financial Times 100-share index fell 6.7 to 1,855.5.