Dow Closes Off 25.99 as Gulf Anxiety Clings

The stock market declined today, nearly erasing the gains of the previous session as anxiety over the Middle East prevailed.

The Dow Jones average of 30 industrials fell 25.99 to close at 2,459.65.

Declining issues outnumbered gainers by about 3 to 1 on the New York Stock Exchange, with 1,118 issues down, 421 up and 448 unchanged.

Big Board volume totaled 155.57 million shares, against 155.94 million in the previous session.

The NYSE’s composite index fell 1.68 to 167.52. At the American Stock Exchange, the market value index closed at 310.06, down 3.11.

Prices opened mixed before the drift lower gathered momentum. Analysts said the market appeared to stabilize only because sellers moved to the sidelines, not because buyers had surfaced to put a floor under prices.

Stocks managed to inch up from their worst levels only in the last hour of trading.

In the energy pits, the near-term crude contract climbed back above $38 per barrel. But Alan Ackerman, senior vice president at Gruntal Financial Inc., cautioned that what is burdening the stock market is more complex than just rising oil prices. “We’ve had some relief in the upward pressure on energy prices, but we’ve had no relief in the . . . war talk.”

Indeed, many analysts said the possibility of a military conflict with Iraq has paralyzed the market, inhibiting traders from holding stocks even overnight for fear war might break out and they would be left vulnerable.

Further, concern about the economy and the budget deficit add an element of confusion to the market. The lack of agreement on a budget-reduction plan, coupled with today’s announcement that durable goods orders fell 0.8% in August, “brings everything back into light that things are not that good,” said James Schroeder, an analyst at MMS International in Chicago.

Government bonds posted minor gains and losses this morning as the credit market took its lead from oil prices.