STOCKS : Dow Down 3.96 After Cutting Early Losses

Stocks closed modestly lower on Wall Street on Friday after clawing up from deeper losses earlier in the session as the market worked its way through a quarterly “triple-witching hour.”

The Dow Jones average of 30 industrials slipped 3.96 to 2,948.27, finishing the week with a net loss of 6.93 points. Big Board volume was a heavy 237.7 million shares. In the broader market, 561 issues were up, 1,028 down and 457 unchanged in nationwide trading of New York Stock Exchange-listed stocks, .

Analysts said the expiration of stock-index and options contracts made investors wary all through Friday’s session.

“Quite a few people were on the sidelines,” said Peter Davies, a vice president at Nomura Securities. “Most people are not inclined to make aggressive bets during the course of triple witching.”

Triple witching is the term stock market insiders use to describe the quarterly period when Standard & Poor’s 500 index futures, Major Market Index futures and Standard & Poor’s 100 index options all expire simultaneously.

March contracts expired Friday.

Earlier in the day, investors got a further look at how the economy fared in February when the government reported that producer prices fell 0.6%, but the core inflation rate rose 0.4%.

Davies said the rise may have dampened some hopes for lower interest rates but that expirations activity helped offset the pressure on stocks.

Among the market highlights:

* GTE Corp. lost 3/4 to 32 3/4. Smith Barney downgraded its rating to “hold” from “buy,” traders said.

* Seagram Co. gained 1 1/4 to 95 7/8. The company reported a rise in fourth-quarter earnings to $1.87 a share from $1.53.

* Tenneco Inc. lost 1 3/4 to 46 7/8 after news that the president of its J. I. Case unit, James Ashford, is resigning.

* Wang Labs rose 1/2 to 4 7/8 on more than 2.5 million shares traded. The company said it did not know the reason for the stock activity.

* Centocor Inc. lost 1 3/4 to 64 3/4, and Xoma Corp. fell 1 3/8 to 25 1/2. Merrill Lynch lowered its estimates for both companies.

* Merrill Lynch rose 1 5/8 to 32 1/4. Sanford C. Bernstein & Co. raised its 1991 earnings estimate on the company.

* Caterpillar lost 1 3/8 to 53 3/8. Smith Barney downgraded its rating on the company to “avoid” from “hold,” citing the stronger dollar.

* Warner-Lambert dropped 3 7/8 to 74 3/8 after a Food and Drug Administration statistician said the firm’s Alzheimer’s drug, which was reviewed Friday, has no benefit.

In Tokyo, stocks closed firmer after a late afternoon surge sent them briefly above 27,000 on hopes of a rapid cut in interest rates. The 225-share Nikkei average ended up 300.77 points to 26,843.10.

In Frankfurt, German share prices finished mixed. The DAX was 6 points lower on the day at 1,570.55 and had fallen 31.74 in the week as a whole.

In London, the Financial Times 100-share average was off 6.4 points at 2,494.2.

Credit

U.S. Treasury bond prices fell on the economic reports that were interpreted as showing inflation on the rise and the economy on the mend.

The Treasury’s bellwether 30-year bond fell 31/32 point, or $9.69 per $1,000 in face amount, at closing Friday. Its yield, which moves inversely to price, rose to 8.29% from late Thursday’s 8.20%.

Market analysts pinned the price decline on the Commerce Department’s wholesale price report. The value of long-term government bonds tends to erode during periods of inflation, which in turn drives down their price.

The federal funds rate held at 5.875% late Friday, unchanged from late Thursday.

Commodities

Grain and soybean futures prices closed sharply lower in trading on the Chicago Board of Trade.

On other markets, silver was higher while gold and platinum retreated; livestock and pork futures were mostly higher, and energy futures retreated.

Leading the selloff on the Board of Trade were wheat futures, which sold off in anticipation of heavy precipitation over the weekend in the hard red winter wheat region.

“There will be a lot more rain than people thought,” said Joel Karlin, an analyst with Research Department Inc. in Chicago.

Soybean futures were also hard hit by the selloff, with a lack of export business--191 to 200 metric tons last week--weighing on the market.

Gold was 30 to 50 cents lower, with April at $365.80 an ounce; silver was 6.0 to 6.2 cents lower, with March at $4.091 an ounce, and platinum was 60 cents to $1 lower, with April at $406.40 an ounce.