FINANCIAL MARKETS : STOCKS : Dow Slips 3.35 as Power Loss Crimps Volume

Investors plodded through a sultry summer Monday to nudge stock prices lower. The heat and a power outage on Manhattan’s East Side kept some traders away, cutting volume to its lightest in two weeks.

The Dow Jones industrial average, up 35.55 points last week, slipped 3.35 to 3,012.97. Smaller stocks were hit harder, with the NASDAQ composite index losing 2.56 points, or 0.5%, to 494.99.

Declining issues outnumbered advances 891 to 681 on the New York Stock Exchange, where volume came to an estimated 148.90 million shares as of 4 p.m. EDT, against 187.29 million at the same point Friday.

“We just had a little bit of a trading pullback,” said Jeffrey Kaminsky, manager of block trading at Mabon Securities.

Monday’s midafternoon power outage briefly hampered operations at some brokerages and banks. Otherwise, trading was staid, investors focusing on corporate earnings reports.

Brad Turner, McDonald & Co. investment strategist, said the market still is groping for direction amid fresh worries over the insurance industry. “Until we see a better environment, I still anticipate a fairly narrow trading range, with probably somewhat of a downward bias,” he said.

Among market highlights:

- Insurance stocks were slammed as investors fretted about the companies’ real estate holdings and other shaky investments. Travelers Corp.--among six insurers downgraded Friday by Moody’s Investors Service--sank 1 to 19 7/8. It said second-quarter earnings will be within the range of analysts’ estimates.

Aetna lost 1 3/4 to 39 1/4, Cigna fell 2 to 42 7/8, Mercury General was off 1 1/4 to 32, and Progressive fell 2 3/8 to 53 1/2.

- California housing stocks were broadly lower on renewed worries about the state’s economy and future home sales. Kaufman & Broad sank 1 to 11 1/2. Standard Pacific lost 3/8 to 8 1/4.

- Among stocks helped by favorable earnings reports, Reebok jumped 1 3/4 to 28 3/4 on a 40% rise in second-quarter earnings. Bankers Trust soared 4 5/8 to 57 5/8 after its quarterly earnings exceeded expectations.

Southland issues that rose on favorable earnings reports included Agoura Hill-based hazardous waste firm American Ecology, which was up 1/2 to 14 1/4, and Santa Ana-based medical instrument maker Tokos Medical, which rocketed 2 3/4 to 32, a new high.

- On the downside, clothing maker Liz Claiborne plunged 7 1/4 to 41 1/8 after reporting higher earnings but warning of slower growth the second half. DSC Communications plummeted 1 5/8 to 5 1/2 after a Brown Bros. analyst cut earnings estimates and DLJ Securities took the telephone systems stock off its buy list.

- Many industrial stocks moved higher on hopes for improved profits later this year. Eaton gained 2 1/2 to 65 1/2, Superior Industries added 1 to 26 3/8, 3M rose 2 1/4 to 93, and Goodrich was up 1 5/8 to 45 7/8.

- C&S; Sovran added 1 5/8 to 27 1/2 and NCNB fell 2 to 35 after the two Southeastern banks announced a merger, as expected. Most other bank stocks were lower.

- Chatsworth-based Syncor International, which makes drugs that allow doctors to view images of internal body organs, jumped 1 to 18 1/2, a 52-week high.

Overseas, shares in London were boosted by hopes that Britain’s recession is ending. The Financial Times 100-share average closed at 2558.5, up 17.0 points. In Frankfurt, the DAX average eased 0.96 points to 1,623.03 in quiet trading.

In Tokyo, the continuing brokerage scandal pushed investors to the sidelines again. The 225-share Nikkei average ended down 161.07 points at 22,705.29.

Credit

Government bond prices were mixed in a listless session as the market appeared concerned about a flood of upcoming Treasury security sales.

The Treasury’s 30-year bond rose 3/32 point, or 94 cents per $1,000. Its yield slipped to 8.46% from 8.47% Friday.

The federal funds rate, the interest on overnight loans between banks, was 5.75%, up from 5.675% Friday.

Currency

The dollar rose against major currencies in thin trading.

In New York, the greenback finished at 1.762 German marks, up from 1.748 Friday. Against the Japanese yen, it ended at 137.65, up from 136.40 Friday.

Commodities

Oil prices retreated from last week’s post-Gulf War record as an upcoming United Nations decision on whether Iraq can export oil again persuaded traders to take profits.

The August contract for light sweet crude settled at $21.72 a barrel on New York’s Mercantile Exchange, down 44 cents from Friday, when it reached the highest level since the war’s final days.

Precious metal futures slipped on New York’s Comex in response to the disinflationary ramifications of lower oil prices. Gold ended $3 to $3.30 lower, with July at $367.60 an ounce; silver was 6.1 to 7.1 cents lower, with July at $4.33.

Market Roundup, D10