Dow Adds 4.27 : Troop Cut Plan Gets a Low-Key Response

The stock market struggled to a small gain Wednesday in a muted response to Soviet leader Mikhail S. Gorbachev’s speech at the United Nations.

The Dow Jones index of 30 industrials, which had risen 57.08 in the two previous sessions, added an additional 4.27 to 2,153.63.

Advancing issues outnumbered declines by about 5 to 4 in nationwide trading of New York Stock Exchange-listed stocks. Big Board volume came to 148.36 million shares, down from 158.34 million in the previous session.

Gorbachev announced that the Soviets would unilaterally reduce their military forces by 500,000 and pull some armored divisions out of Eastern Europe.

Tuesday’s rally was attributed in part to news of the planned pullout in the belief that lower defense spending by the superpowers would allow President-elect George Bush to reduce the federal budget deficit.

Investors Turn Cautious

“Bush has promised that he can narrow the deficit without raising taxes--it was regarded with great skepticism, but if there is some ability to cut defense spending it would give Bush the last laugh,” said Mark Tavel, president of Rothschild Asset Management.

Some analysts said Wednesday’s lackluster performance was caused by profit taking after the recent strong gains.

As often happens in the stock market, analysts said, investors turned more cautious when their expectations were fulfilled.

Brokers also said concerns persisted about the interest rate outlook, including the possibility that the Federal Reserve might soon raise its discount rate again in an effort to keep economic growth at a sustainable pace.

“I would take a fairly cautious view of the short-term (prospects for the market),” said portfolio strategist Andrew Riley at Yamaichi Securities International. “We’ve got a virtually flat yield curve, and I believe the Fed is going to tighten (monetary policy).”

Texaco made a big contribution to the Dow’s gain Wednesday, climbing 2 1/2 to 51 3/8 in active trading. Speculation intensified on the Street that Carl C. Icahn, who holds a stake in the company, might be planning a new effort to gain control of it.

AT&T;, Sears Rise

Among other actively traded blue chips, American Telephone & Telegraph rose 1/4 to 29 3/4, Sears Roebuck gained 1/4 to 40 1/2, International Business Machines dropped 1 1/8 to 121, General Electric rose 1/8 to 45 3/4 and Exxon was unchanged at 44 3/8,.

Jefferies Group rose 1/8 to 11 1/4 in the over-the-counter market. The company said it and some of its employees bought a large block of Jefferies shares from Primerica.

Shares of Long Island Lighting Co., which fell Tuesday, dropped 1/4 to 12. The utility is seeking to have set aside a federal court jury decision ordering it to pay $23 million in damages for allegedly supplying false data on rate increases.

Shares in FGIC Corp., an insurer of municipal bonds, rose 3 1/4 to 22. The company got a buyout bid of $22.50 a share from a unit of General Electric Co.

Shares of Lafarge Corp. gained 1 1/2 to 18 1/8 on news that an investor-led group is prepared to raise its offer for the firm to $35 a share from $30.

Intergraph Corp.’s shares fell 3 1/2 to 20 1/2 after the company told analysts results for the fourth quarter would be lower than their expectations.

The Wilshire index of 5,000 equities closed at 2,729.971, up 6.212 or 0.23% from Tuesday.

The NYSE’s composite index of all its listed common stocks gained 0.36 to 156.14.

Standard & Poor’s industrial index rose 0.69 to 320.54; its 500-stock composite index was up 0.54 at 278.13.

The NASDAQ composite index dropped 0.64 to 376.36; the American Stock Exchange index closed at 297.77, up 0.41.

In foreign trading, share prices were higher on the London Stock Exchange with the Financial Times 100-share index gaining 4.3, to close at 1,771.7.