Dow Falls 5.82 After Leading Indicators Stall

Market Overview

* Blue chip stocks closed slightly lower Tuesday after the government’s main economic forecasting gauge confirmed that the economy’s recovery has stalled.

* Oil prices plunged amid rumors of an attempted coup in Iraq. Wheat prices soared on expected Soviet purchases.

Stocks

After Monday’s surprise 40.70-point surge in the Dow Jones industrial average, stocks fell back into the doldrums. Analysts said the market was marking time, waiting for the November unemployment report, due on Friday.

The Dow slipped 5.82 points to 2,929.56. However, airline and railroad stocks soared on continued bargain-hunting, sending the Dow transportation index up 23.92 points to 1,223.28.

Overall, declining issues narrowly outnumbered advancing ones on the New York Stock Exchange. Volume came to 187.25 million shares, down from 188.34 million Monday.

The Commerce Department’s index of leading indicators, which forecasts economic activity six months into the future, edged up 0.1% in October after falling 0.1% in September. The anemic back-to-back figures confirmed a no-growth situation in the economy, analysts said.

Monday’s Dow gain may just have been a knee-jerk reaction to a “deep oversold” condition after two weeks of losses, said analyst Alfred Goldman at brokerage A. G. Edwards & Sons Inc. With Tuesday’s economic news, stocks settled back into the uncertain trading that has been the rule this fall, as investors vainly search for clues to the economy’s next move.

Still, many investors continued to bargain hunt, unwilling to walk away from the market entirely. Besides the jump in transportation stocks, smaller stocks also were favorites, with the NASDAQ composite index rising 2.43 points to 533.34.

There was some good news on the dividend front: The research firm Standard & Poor’s Corp. reported that 105 companies raised dividend payments to shareholders in November, up from 100 in November, 1990. That marks the second time in three months that dividend increases rose from the depressed levels of a year ago.

S&P; also said that the number of companies cutting dividends in November was the same as a year ago, at 15, and the number omitting dividends entirely slipped to 20 from 22.

Among the market highlights:

* Among airline stocks, Delta soared 3 3/8 to 60 3/4, AMR (parent of American Airlines) rose 7/8 to 60 7/8, and Southwest added 1/2 to 29 7/8. Among rails, Conrail jumped 2 5/8 to 76 1/2. Brokerage firm Paine Webber added the stock to its “focus” list. Other rails gaining included CSX, up 1 1/2 to 51 1/2, and Norfolk Southern, up 1 3/8 to 58 1/2.

* Oil stocks were weak as crude prices tumbled. USX-Marathon fell 1 7/8 to 24 3/8 on news that it found only non-commercial amounts of oil in a well drilled in Tunisia. Arco slid 1 5/8 to 103 3/8, Mobil lost 1 to 64 3/8 and Texaco slid 1 1/8 to 58 1/2.

* Among smaller stocks, some of the year’s big gainers came back to life. Retailer Pic ‘N’ Save jumped 2 to 23, drug firm Agouron Pharmaceuticals added 1 3/8 to 16 3/8, and Gensia Pharmaceuticals jumped 4 3/8 to 43 1/2. A Gensia unit received abbreviated new drug application approvals for injectable methyldopate, used to treat acute hypertension, and metoclopramide, used to prevent nausea.

* Banana producer Chiquita Brands plunged 4 5/8 to 36 3/4 after its president said the company’s 1992 earnings growth could be close to the lower end of a 10% to 15% range. Rival Dole slid 1 3/8 to 34 in sympathy.

* Consumer products firm First Brands (Glad bags, Prestone antifreeze) tumbled 4 to 21 1/2. It warned that its first fiscal-half sales would be below expectations, and cited weak antifreeze sales.

* Among Southland issues on the plus side, HMO firm PacifiCare rocketed 3 3/8 to 29 after Monday’s healthy earnings report. Also, mortgage banker Countrywide Credit jumped 2 1/2 to 34 on a strong earnings report.

* L.A.-based Whittaker Corp. split into two stocks, one for the firm’s aerospace operations (which remains Whittaker) and the other for the biotech operations (now Biowhittaker). Both issues closed at 9 3/8 apiece on the NYSE.

Overseas, Tokyo stocks staged a technical rebound from Monday’s plunge to close sharply higher as arbitrage buy programs combined with bargain-hunting to lift prices, brokers said. The 225-share Nikkei average rose 174.54 points, or 0.8%, to end at 22,166.83.

Shares also closed slightly higher on London’s Stock Exchange. The Financial Times 100-share average rose 5.3 points to close at 2,420.2. In Frankfurt, the DAX average inched up 1.40 points to 1,546.84.

Credit

Bond yields closed flat to slightly lower in lackluster trading. The price of the Treasury’s 30-year bond was up 1/16 point, or 63 cents per $1,000 in face amount, at closing. Its yield held at 7.90%.

Several analysts said the market’s attention remained fixed on the release Friday of the November unemployment report, which may give new clues to the near-term direction of interest rates.

Economists have forecast a drop of 31,000 in the number of non-farm jobs created by the economy in November, and a rise in the unemployment rate to 6.9% from 6.8%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 4.688%, down from 5% late Monday.

Currency

The dollar fell slightly against major currencies after news that White House Chief of Staff John Sununu had resigned.

The dollar fell to 1.608 German marks from 1.615 marks on Monday and to 129.30 Japanese yen from 130.15 yen on Monday.

Other late dollar rates in New York, compared to late Monday’s rates included: 1.4230 Swiss francs, down from 1.429; 5.498 French francs, down from 5.517; 1,213.80 Italian lire, down from 1,218.00, and 1.134 Canadian dollars, up from 1.134.

Commodities

Wheat futures prices soared to an 18-month high on the Chicago Board of Trade after the Soviet Union earmarked about 40% of $1.25 billion in U.S. food aid for wheat purchases.

The Soviet purchases could lower America’s wheat stockpile to one of its lowest levels ever and raise wheat prices above $4.25 a bushel, analysts said.

On other commodity markets, petroleum futures plunged; precious metals retreated, and livestock and meat futures were lower.

Wheat for delivery in December rocketed 15.25 cents to $3.86 a bushel, the highest settlement of a near-term wheat contract since May 17, 1990.

Meanwhile, energy futures fell sharply on the New York Merc amid rumors of an attempted coup in Iraq, sending light, sweet crude oil for January delivery down 57 cents to $20.51 a barrel.

Traders reasoned that an ouster of Iraqi leader Saddam Hussein could prompt the United Nations to lift its embargo against Iraq, bringing Iraqi oil onto the market.

On New York’s Comex, December gold fell $3.50 to $363.50 an ounce, and December silver slid 4.4 cents to $4.00.