Dow Gains 3.91 in Mixed Trading : Blue Chips Stage Last-Minute Rally, Broader Indexes Fall

A late surge in blue chip issues left the stock market narrowly mixed Tuesday amid worries about the course of interest rates.

A spurt in the final minutes of trading enabled the market’s best-known indicator to erase exactly the modest loss it recorded a day earlier. But several broader market gauges finished lower for the day.

And analysts said the pace of activity was tempered by anticipation of the October trade report, which is to be released today.

The Dow Jones index of 30 industrials, which lost 3.91 points Monday, made it all back on Tuesday, gaining 3.91 to close at 2,143.49.

The index had been down nearly 15 points with 30 minutes remaining in the session and was off nearly 10 points five minutes before the close.

Interest Rate Worries

“The blue chips have been leading the market and maybe they are doing it again,” said Thomas Czech, first vice president for research at the brokerage Blunt Ellis Loewi in Milwaukee.

He noted that the dollar has been strong, and said the late blue chip buyers may suspect the trade deficit report will help the market.

In the broader market, however, declining issues outnumbered gainers by about 9-to-5 in nationwide trading of New York Stock Exchange-listed stocks. Big Board volume rose to 132.34 million shares, from Monday’s 124.16 million.

Analysts attributed the decline in the broader indexes to deepening worries that interest rates could be headed higher, making yields on short-term Treasury issues more competitive with the uncertain returns on stocks.

The nervousness was heightened because Federal Reserve policy makers were gathering for a private two-day meeting at which they are expected to assess the economy’s strength and whether inflation is becoming a problem.

In the latest indication of the economy’s health, the Commerce Department reported that November retail sales rose 1.1%, about twice as big a gain as many analysts had expected. It also revised upward its estimate of growth in October to 1.6% from the initial report of 0.9%.

The report sent bond prices lower early in the session, and stock prices followed.

Rumors Cited

“It’s the old good news is bad news syndrome,” said Larry Wachtel, a market analyst for Prudential-Bache Securities Inc. “Anything that smacks of economic vigor does not sit well with the market.”

Traders said blue chips staged their last-minute rally on speculation that U.S. merchandise trade data for October, due for release at 8:30 a.m. today, would show a smaller than expected shortfall.

“There was probably a rumor that the trade deficit would be below expectations. It caused a buying spree,” said one trader.

Most economists expect a U.S. trade gap of about $10.5 billion for October. Caution ahead of the trade report and the possibility that the Federal Reserve would tighten credit kept participation light.

Market analysts said any figure below expectations could spark some buying today. A better-than-expected figure would be positive for the dollar and would reduce some of the pressure on the Fed to tighten monetary policy to shore up the currency.

Texaco was one of the most active issues on the NYSE, rising 7/8 to 51 5/8 on takeover speculation as a group led by Carl C. Icahn disclosed that it holds a 15.8% stake in the oil company.

Bormans was the biggest percentage gainer on the NYSE, rising 11 3/4 to 24 7/8 after disclosing that it was negotiating on a takeover offer at $27 a share.

Pillsbury rose 3/4 to 62 7/8. On Monday, it rejected as inadequate a sweetened $63-a-share takeover offer from Grand Metropolitan.

Among other actively traded blue chip issues, American Telephone & Telegraph rose 1/8 to 29 3/8, General Electric fell 1/8 to 45 7/8 and Exxon rose 7/8 to 45 1/2.

Stock prices drifted lower on the Tokyo Stock Exchange, with the Nikkei 225-share index down 74.48 points, or 0.25%, to 29,597.81, adding to Monday’s 121.13-point loss.

In London, shares prices closed slightly higher after seesawing throughout the session ahead of a late rally. The Financial Times 100-share index closed up 4.7 points at 1,752.6.