Profit Taking Trims 4.25 Off Dow : Market Overview

* Stocks edged lower in light trading after a run-up in prices Friday. The Dow Jones industrial average fell 4.25 points to 3,272.14.

* Treasury bond yields eased slightly, while gold stabilized after big losses last week.

Stocks

As usual for a Monday, trading was thin and uneventful.

In the broad market, declining issues outnumbered advances by 7 to 5 on the New York Stock Exchange, where volume totaled just 157.05 million shares, down from Friday’s 246.88 million.

With the quarterly expiration of key stock index futures and options contracts last Thursday and Friday, many traders were washed out of the market. The Dow rose 15 points on Friday.

Now the focus is again on economic data and the question of the strength of the apparent recovery.

“We are in between spurts of data and are coming up on the last week of the quarter,” noted Stefan Abrams, chief investment strategist at Kidder, Peabody & Co.

“Every bit of economic data so far can be interpreted bullishly or bearishly,” Abrams said. “That’s the reason investors don’t have the conviction to step into stocks. I think there’s nothing much out there to drive the market just yet.”

Among the market highlights:

* Some investors continued to push into stocks that would benefit from a sustained economic recovery. Leading gainers included Great Lakes Chemical, up 2 5/8 to 59 3/4; Goodyear Tire, up 1 3/4 to 69; Dow Chemical, up 1 3/4 to 61 7/8, and Dupont, up 3/4 to 46 7/8.

* Van Nuys-based Superior Industries closed at a new all-time high of 50 1/2, up 1. The auto parts maker has been riding high on recent news of strong sales growth, including business with Japanese auto makers.

* Intel dropped 1 3/4 to 63 1/4 after Barron’s magazine said that the computer chip giant faces growing competition and that its earnings may prove disappointing.

Many other large tech stocks also fell. Cabletron Systems lost 2 to 54, Dell Computer dropped 1 7/8 to 38 7/8, Lotus eased 1 1/2 to 35 3/8 and Computer Sciences slumped 1 5/8 to 67 3/4.

* Profit taking also continued in many health care issues. Among the losers: Johnson & Johnson sank 1 3/8 to 94 5/8, Pfizer lost 1 3/8 to 69 5/8, U. S. Healthcare gave up 1 1/4 to 46 1/2. U. S. Surgical dropped 2 7/8 to 104 3/8, and Critical Care fell 3 1/2 to 54 1/4.

* BankAmerica hit an all-time high in advance of word that its merger with Security Pacific had been OK’d by the Federal Reserve. BankAmerica closed at 45 5/8, up 3/8. It traded as high as 45 7/8. Security Pacific rose 3/8 to 39 7/8.

* Harley-Davidson added 2 7/8 to 62 7/8. Morgan Stanley repeated a buy rating and added the motorcycle maker to its model portfolio.

* Video store chain Blockbuster Entertainment, the most active NYSE issue, rose 5/8 to 15. Merrill Lynch upgraded its rating to buy from above average , saying the stock was attractive relative to expected earnings .

* King World Productions lost 1 1/4 to 25 1/4. Brokerage Oppenheimer & Co. downgraded the TV show syndicator from buy to market-performer.

* Quidel jumped 1 7/8 to 7 1/8 on NASDAQ. A Ladenburg Thalmann analyst recommended purchase of the stock. The company last week received regulatory approval for an ovulation predictor.

* Among Southland issues, Perris-based Modtech fell 1/4 to 3 on NASDAQ. The company, which builds modular classrooms, said it posted a loss of $2.85 million, or 77 cents a share, in the fourth quarter as sales plunged to $3.45 million from $9.09 million a year earlier.

Modtech said the financial troubles of the state and its school districts have caused a drop in new classroom orders. The company, which last November said it would lay off 30% of its work force, now is boosting that to 40%. It also said executive officers will take a 25% cut in pay, and that one officer will take a leave of absence.

Overseas, European markets continued to take a drubbing on worries about an economic slowdown on the Continent. London’s Financial Times 100-share average closed down 15.6 points at 2,441.0. In Frankfurt, the DAX index dropped 18.83 points to 1,717.47. In Paris, the CAC 40 index sank 34.55 points to 1,884.57.

In Tokyo, the Nikkei average rose 54.51 points to 20,239.60, trying to stabilize after last week’s selloff.

In Mexico City, the Bolsa index soared 49.43 points, or 2.7%, to 1,888.37, as buyers returned in droves.

Credit

Bond yields were mostly lower, after surging Friday.

The price of the Treasury’s 30-year bond rose 3/32 point, or 94 cents per $1,000. Its yield slipped to 8.03% from 8.04% Friday.

On Friday, Treasury yields jumped because of several factors, including a report from a regional Federal Reserve bank that detected an economic upturn. Signs of economic improvement often push interest rates up on worries about a renewed surge in inflation.

John Canavan, analyst at Stone & McCarthy Research Associates, said some market players now are looking ahead as far as April 3, when the government will release March employment figures. That data will give further clues about the strength of the economy.

In the near term, the Treasury is scheduled to sell $14.75 billion worth of two-year notes today and $10.25 billion worth of five-year notes Wednesday. Both are record amounts.

The federal funds rate, the interest on overnight loans between banks, was 4%, up from 3.75% Friday.

Currency

The dollar was mostly lower in slow trading as dealers adjusted their positions in anticipation of new data on the economy.

The dollar slipped in New York to 133.45 Japanese yen from Friday’s 133.85.

It also fell to 1.667 German marks from 1.673.

Commodities

Gold futures for March delivery closed unchanged at $338.20 an ounce on New York’s Comex, stabilizing after dropping a total of $8.50 last week.

The plunge had been fueled by South African white voters’ decision to dismantle apartheid, which gold traders believe removes any threat to supply lines. If apartheid had remained, civil war in South Africa could have closed gold mines.

Meanwhile, high inventories of silver in Comex warehouses continued to depress silver prices. The March contract lost 2.4 cents to close at $4.09 an ounce.

In livestock markets, the prospect of more beef than expected showing up at meat counters sent cattle futures skidding on the Chicago Mercantile Exchange.

The market was trading in the backwash of an Agriculture Department report Friday showing an increase--small but unexpected--in the number of animals placed on feedlots during February.

While the net result was 8% fewer cattle in feedlots than a year earlier, many had expected less.

April cattle fell 0.65 of a cent to 77.10 cents a pound.

Elsewhere, lumber futures dropped, pressured by talk that a 14.5% tariff imposed by the U.S. Commerce Department on Canadian softwood lumber imports earlier this month might be reduced. May lumber fell $2.90 to $254.40 per thousand board feet.

In energy markets, light, sweet crude oil for delivery in May was 4 cents higher at $19.13 a barrel on the New York Mercantile Exchange.