Stocks Prices Fall for 3rd Day; Dow Off 12.77

NEW YORK — The stock market fell Friday for a third straight day in one of the slowest sessions of the year as April employment data left investors uncertain whether interest rates will rise to keep the economy from overheating.

The Dow Jones industrial index fell 12.77 points to 2,007.46. For the week it dropped 24.87 points.

Volume on the New York Stock Exchange was 129.1 million shares, down from 171.8 million Thursday. For the week the volume was about 755.6 million shares.

Declining issues outnumbered advances by more than 4 to 3 on the NYSE.

Before the market opened, the Labor Department reported that the civilian unemployment rate fell to 5.4% in April from 5.6% the month before.

Wall Street had been warily awaiting the figures for several days, worrying that signs of continuing strength in the economy would be read as a portent of increasing upward pressure on inflation and interest rates.

Steady Trading Range Seen

“An upward revision in the March (non-farm payroll) figure and a lengthening work week did not assuage the market’s concern that the economy is too vigorous and may need some reining in,” said Larry Wachtel of Prudential-Bache Securities Inc.

But other analysts said the data confused investors, leading to the low volume of trade.

“The non-farm number was bullish and the overall unemployment was bearish, and investors decided to take the down road after seeing the bond market,” said trader Brad Weekes of Donaldson Lufkin & Jenrette.

Wachtel said he does not see Wall Street moving out of its current trading range for some time.

“We are stuck in a trading range for a while,” he said.

Another analyst said the low volume was a key indicator of how investors were viewing stock trading. “It is a reflection of apathy,” he said.

At first, the market advanced on the news, apparently because the reported increase in non-farm payroll employment of 174,000 came in toward the low end of estimates.

Inflation Concerns

But as the session passed, prices headed lower while bond prices dropped and analysts described the job data as a likely negative for the inflation outlook.

“Hourly earnings rose a disquieting 0.5%,” said economists at Merrill Lynch in their initial appraisal of the report. “Tight labor markets will lead to further wage gains and rising inflation this year.”

Losers among the blue chips included Merck, down 3 at 152; International Business Machines, down 3/4 at 110 1/2; Procter & Gamble, down 5/8 at 74 3/4; Ford Motor, down 7/8 at 47, and General Electric, down 1/2 at 39 1/2.

Genentech fell 2 3/4 to 30 3/4. A company presentation prompted some analysts to scale back their expectations for sales this year of a Genentech drug used in treating heart attack victims.

Trans World Airlines climbed 1 1/8 to 35 1/2. Directors approved a slightly increased offer from Carl C. Icahn, the company’s chairman, to take it private by acquiring about 23% of the stock still in public hands.

Micron Technology rose 1 3/4 to 23 on large volume in the over-the-counter market. The stock has recently been recommended by investment adviser Yale Hirsch and other analysts as a beneficiary of heavy demand and rising prices for computer memory chips.

Indexes Lower

The NYSE’s composite index lost 0.63 to 145.88.

The Wilshire index of 5,000 equities closed at 2,578.307, down 10.367 from Thursday’s close.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 151.29 million shares.

Standard & Poor’s industrial index fell 1.65 to 300.01, and S&P;’s 500-stock composite index was down 1.31 at 257.48.

The NASDAQ composite index for the over-the-counter market dipped 0.09 to 379.42. At the American Stock Exchange, the market-value index closed at 301.81, down 0.58.

On the Tokyo Stock Exchange, the Nikkei 225-share index finished the day’s trading at 27,534.39 points, down 135.33 from Monday’s record close. The exchange was closed for a holiday Tuesday, Wednesday and Thursday.

Share prices on the London stock exchange rose, boosted by gains in early trading on Wall Street and a flurry of markups after the start of a new trading account.

At the close, the Financial Times-Stock Exchange 100-stock index closed at 1,801.1, up 11.6 from Thursday.