Stocks Mixed in Thin Trading; Dow Off 3.20

NEW YORK — The stock market closed mixed in light trading Tuesday as the Dow Jones industrial average crept lower but most stocks advanced.

The 30-stock Dow index eased 3.20 points to 2,038.23, giving back a portion of the 24-point advance in the first session of the week.

“I was worried that if the institutions came in and sold stocks, we would have seen a tremendous vacuum on the downside,” said Philip C. Puccio, senior vice president and head of institutional trading at Dillon Read & Co. in New York. “The buyers stepped up to the plate and took out a lot of sell interest.”

Supporting the market’s recent upturn is the view that the Federal Reserve’s inflation fight may finally be bearing fruit, amid signs the economy is cooling off. The government reported a 3.5% fall in July factory orders and a 0.8% drop in July leading indicators, offering relief on concerns over higher interest rates.

New Data Awaited

“There’s a faint glimmer of hope that the economic growth is slowing down,” said Michael Metz, market strategist at Oppenheimer & Co.

Volume on the New York Stock Exchange was the fourth lowest this year at 108.72 million shares, compared to the Monday level of 99.23 million shares, the second lowest, and the Friday volume of 89.24 million shares, the lowest.

Traders offered a variety of reasons for the lethargic business, ranging from pre-Labor Day vacationing to investor apathy that has pervaded the market all month.

“The volume is so thin I think the trigger pullers are all out at the Hamptons,” said Charles Eaton, a market strategist at Nikko Securities Co. International in New York.

Hildegarde Zagorski, a stock analyst at Prudential-Bache Securities Inc. in New York, suggested that many investors were awaiting the Labor Department’s report Friday on August unemployment, which could provide clear signals on the direction of the economy and interest rates, two key market concerns.

“Nobody’s too willing to get into the market ahead of those numbers,” she said. Commerce Department reports Tuesday on the index of leading indicators and factory orders for July, she said, had little impact on Wall Street because the numbers were well within expectations.

Puccio said that unlike the previous session, at least half the participation in the market Tuesday was from the big institutional investors that have the potential to incite a broad rally with healthier volumes.

He said if the unemployment figures suggest the economy is slowing down, thereby easing the risk of inflation, “a lot more participants will come into this market.”

Advancing issues outnumbered declines by about 7 to 6 in nationwide trading.

Among the most prominent issues, Gould jumped 7 1/8 to $22.75 in a late spurt of buying on news that Nippon Mining of Japan would acquire the company for $23.25 a share. The announcement came shortly before the close of trading.

Federal Home Loan Mortgage’s preferred stock advanced 5 1/2 to 144 1/2 after it announced further details of a plan to ease ownership restrictions.

Blue chips were mixed. IBM fell 1/2 to 112 7/8; Union Carbide rose 3/8 to 22 3/8; Goodyear fell 1/2 to 60 1/8, and General Electric rose to 40 1/2.

The Wilshire index of 5,000 equities closed at 2,617.370, up 1.911 from Monday’s close.

The NYSE index rose 0.11 to 148.66.

Standard & Poor’s industrial index rose 0.12 to 301.32, and S&P;’s 500-stock composite index rose 0.18 to 262.51.

At the American Stock Exchange, the market value index fell 0.14 to 294.91. The NASDAQ composite index for the over-the-counter market closed at 376.49, up 0.28.

In Tokyo, the Nikkei 225-share index gained 132.55 points to close at 27,511.65. It fell 299.81 points on Monday.

In London, where the London Stock Exchange was closed for a holiday Monday, share prices finished higher in cautious trading helped by gains on the stock markets in Tokyo and New York.

The Financial Times 100-share index rose 8.2 points to 1,843.4.