Dow, Troubled Early by Price Report, Gains 7.25

The stock market wavered today, weighed down during most of the session by the latest bout of inflation worries, before advancing at the close.

The Dow Jones average of 30 industrials rose 7.25 points to 2,639.29.

Declining issues outnumbered advances by about 4 to 3 on the New York Stock Exchange, with 836 down, 626 up and 520 unchanged.

Big Board volume totaled 147.90 million shares, up from 128.17 million in Monday’s session.

The NYSE’s composite index edged up 0.02 to 188.05.

At the American Stock Exchange, the market value index slipped 0.50 to 370.98.

“People are pulling their horns in a little bit,” said Ralph Acampora, an analyst at Kidder, Peabody & Co. “There’s a little apprehension, a little uncertainty.”

Analysts said an early advance ran out of steam when the market took a closer look at the government report today on inflation, which was slightly worse than most analysts had been expecting.

The Labor Department reported that consumer prices shot up 0.5% last month as higher gasoline and food costs gave the country its biggest inflation surge since May.

“That obviously didn’t help” stock prices, said Bill Raftery, an analyst at Smith Barney, Harris Upham & Co.

The government blamed the increase on a jump in gasoline costs, higher prices for new cars and a sharp turnaround in fruit and vegetable prices.

Much of today’s selling focused on stocks of companies involved in takeover attempts, analysts said.

The market appeared to be shaky after Monday’s 20.62-point drop in the Dow average, caused by a selling wave that hit defense contractors especially hard.

Defense Secretary Dick Cheney called Sunday for a $180-billion reduction in military spending over the next six years.

Today, White House spokesman Marlin Fitzwater confirmed Cheney’s statements but said President Bush has not decided yet what defense expenditures he will propose to Congress for the next fiscal year.