Skittish Market Hits Resistance to Rally; Dow Closes Off 3.93

Stock prices were mixed today, running into resistance after Tuesday’s advance carried the market to new post-crash highs.

The Dow Jones average of 30 industrials, which had climbed 26.07 points on Tuesday and added another 10 points at the outset today, closed with a 3.93 loss at 2,343.21.

Advancing issues and declines were evenly balanced on the New York Stock Exchange, with 732 up, 729 down and 500 unchanged.

Big Board volume totaled 189.42 million shares, against 217.26 million in the previous session.

The NYSE’s composite index dipped .33 to 167.69.

The market’s rally that began in late November showed signs of flattening in the first few sessions of this month.

It revived on Tuesday in response to General Motors’s announcement of a dividend increase and plans for a 2-for-1 stock split.

Analysts said demand for stock was particularly strong at investing institutions where money managers had built up large cash reserves in the aftermath of the October, 1987, crash.

Rising stock prices have put pressure on many of these money managers to increase their stock holdings or run the risk of missing out on what could amount to a significant market advance.

But after a wave of buying at the opening this morning, the market turned skittish and erratic again.

Bond prices edged up in early trading today as the dollar held steady, and long-term issues continued trading at a lower yield than short-term securities.

The Treasury’s benchmark 30-year bond was up 1/4 point, or $2.50 per $1,000 face amount, at midday while its yield, which moves in the opposite direction from its price, fell to 8.77% from 8.79% late Tuesday.

The 30-year bond ended Tuesday trading at a lower yield than the three-month Treasury bill, something that had not happened since April, 1982. The three-month bill remained steady today at 8.82%.

Long-term rates normally are higher than short-term rates because investors demand a premium for keeping their money tied up longer. The reverse situation reflects, some analysts say, how the Federal Reserve has been pushing up short-term rates to keep inflation under control.

In the secondary market for Treasury bonds, prices of short-term governments ranged from unchanged to up 3/32 point, intermediate maturities rose 5/32 point and long-term issues were up 7/32 point, according to the Telerate Inc. financial information service.

rose 0.58 to 300.84.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9 3/16%, up from 8 7/8% late Tuesday.