STOCKS : Overall Market Rises, but Dow Retreats 22.03

Profit taking and skepticism over Washington’s ability to fashion a budget pushed blue chips lower Tuesday while the broader market was mixed.

The Dow Jones industrial index closed down 22.03 at 2,494.06. Much of the fall came in the session’s last hour during a wave of computerized sell programs.

However, for the second day in a row, the broader market gave conflicting signals. Leading stocks outnumbered losers by 804 to 688 on the New York Stock Exchange, but the NYSE composite index still lost 1.02 points to 170.50.

Big Board volume shrank to 146.30 million shares from Monday’s 152.65 million.

“The excesses on Thursday and Friday were in the Dow,” said Larry Wachtel, Prudential-Bache analyst, referring to a combined 133-point rally last week.

Analysts said blue chips were realigning after their two-day rally as traders took profits. Meanwhile, though over-the-counter stocks had advanced strongly Monday, they ran out of steam on Tuesday. The NASDAQ OTC composite index slipped fractionally.

“The market needs to break above 2,550 (on the Dow) on expanding volume to give us an indication that this is more than a snap-back rally,” said Kenneth Spence, director of technical analysis at Salomon Inc.

Budget talks appeared stymied again Tuesday as House Democrats insisted on a tax increase on the rich, while President Bush and the Republicans talked instead of cutting tax deductions.

Among the market highlights:

* Financial stocks took a new pounding, in what is becoming a broken-record of grief for many investors. Citicorp dropped 3/8 to 12 5/8 after reports that investors were reluctant to buy the bank’s short-term commercial paper on Monday, fearing it is too risky. Other bank losers included First Interstate, down 1 1/4 to 20 5/8, First Chicago, down 3/4 to 14 1/8, and C&S;/Sovran, down 2 3/8 to 16 1/4.

* Among S&Ls;, Glenfed slumped 5/8 to 7 1/2 after it slashed its quarterly dividend in half, to 15 cents a share. CalFed dropped 3/8 to 4, HomeFed fell 1/2 to 4 3/4 and Citadel Holding tumbled 1 3/8 to 23 5/8.

* Good earnings news sent insurer Chubb up 2 1/2 to 41 7/8. Another insurer, Unum Corp., posted stronger-than-expected profits and rose 1 1/2 to 40 1/4.

* Entertainment stocks were mixed. Time Warner climbed 4 1/2 to 76 1/4 in the wake of a smaller-than-expected quarterly loss. Paramount added 1 1/8 to 37 1/4 and MCA rose 1 5/8 to 58 7/8. Also, Disney rose 5/8 to 96 1/2 after forming a partnership with Japanese institutional investors to provide $600 million in film financing.

But Cap Cities/ABC tumbled 32 to 400 after projecting weak fourth-quarter earnings because of slumping ad sales.

* Tech stocks were mixed. Diagnostic Products lost 4 to 26 1/2, apparently on earnings concerns. Sun Microsystems fell 2 3/4 to 20 1/8 after it reported strong earnings but also announced a hiring freeze because of sales concerns. Conner Peripherals rose 1 1/4 to 22 7/8, following healthy earnings.

In Frankfurt, share prices closed up nearly 3%, boosted by domestic investor position covering and some foreign institutional buying. The DAX index of 30 leading German shares ended 39.83 points higher at 1,514.34.

Stock prices on the Tokyo Stock Exchange closed higher as plunging global oil prices spurred the market to its seventh consecutive gain. The 225-share Nikkei average rose 227.44 to 25,298.30.

In London, stocks shrugged off a lower opening on Wall Street to trade firmer in generally thin late business with prices buoyed by the recent weaker trend in oil. The Financial Times 100-share index gained 25, or 1.2%, to 2,127.0.

CREDIT: Traders Pessimistic; Bond Prices Decline

Most bond prices weakened, hurt by what traders called a shroud of economic uncertainty overhanging the market and disgust with the government negotiations to fashion a budget agreement.

The Treasury’s key 30-year bond ended the day about a half point lower or down $5 per $1,000 in face amount. Its yield rose to 8.79% from 8.75% late Monday.

The federal funds rate, the interest on overnight loans between banks, traded at 7.75%, down from 7.813% late Monday.

CURRENCY: Dollar Strengthens as Fed Unloads Yen

The dollar traded mostly higher against other major currencies Tuesday, rising most strongly against the Japanese yen after the Federal Reserve sold yen to buy dollars, traders said.

Traders said the Fed sold an undetermined amount of yen for dollars, apparently at the request of a customer, most likely another central bank. Traders said the sale was not believed to be an attempt by the Fed to affect the value of the dollar against the yen.

The dollar closed at 1.518 German marks, flat with Monday. It rose to 128.15 Japanese yen, up sharply from Monday’s 126.02.

In New York, the British pound fell to $1.943 from $1.945 Monday.

COMMODITIES: Spot Crude Price Up; Copper Surges

Oil prices rebounded after Monday’s record drop of more than $5 a barrel, which was driven by peace signals in the Persian Gulf.

On other commodity markets, copper prices surged, and platinum led the precious metals higher.

On the New York Mercantile Exchange, spot crude oil for December delivery ended at $29.37 a barrel, up from Monday’s close of $28.38 for the November contract.

Futures prices of refined products finished broadly mixed, with near-term deliveries up sharply after Monday’s dramatic plunge.

Heating oil was 3.83 cents lower to 5.08 cents higher, with November at 81.06 cents a gallon; unleaded gasoline was 3.13 cents lower to 3.4 cents higher, with November at 79.90 cents a gallon.

Prices of copper futures surged on the Comex in a powerful rally ignited by fading recession fears and computer-generated buying.

Copper futures settled 3.6 to 5.2 cents higher, with the spot contract at $1.32 a pound. The rally marked copper’s fourth-straight daily advance from a three-month low of $1.23 last Wednesday.

Platinum futures also rose sharply for the fifth straight day on the New York Mercantile Exchange. Like copper, platinum prices fell dramatically when recession fears were on the rise.

Platinum settled $9.90 to $10.10 higher, with October at $422.40 an ounce.

On the Comex, gold futures ended $1.50 to $1.60 higher, with October at $371.20 an ounce; silver was 2.4 to 2.5 cents higher, with October at $4.22.