Dow Dips 4.48 as Recent Rally Fizzles Out : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* Stocks edged lower as traders scrutinized first-quarter earnings reports and failed to find any reason to reignite a recent rally. The Dow average fell 4.48 points to 3,338.77.

* Government bond prices were mostly lower in light trading after an auction of two-year Treasury notes that was in line with expectations.

Stocks

Investors seemed more interested in the government’s auction of two-year notes, so they were mostly staying away from stocks, analysts said.

But bank shares showed another strong performance on the heels of surprisingly strong earnings reports coming out this week.

Airlines took a sizable hit amid concerns about a price war that is expected to cost that troubled industry tens of millions of dollars this spring.

Otherwise, analysts found no notable pattern to the choppy trading.

In the broader market, declining issues barely outnumbered advancers on the New York Stock Exchange. Big Board volume totaled 218.88 million shares, up from Tuesday’s 214.46 million.

Over-the-counter stock prices rose, however, as some technology and biotechnology stocks recovered from a recent selloff.

Among the most actively traded issues on the NYSE:

* Chase Manhattan was up 1 7/8 at 26 1/2, BankAmerica rose 2 to 47, Banc One was up 1 5/8 at 44 7/8, Bank of Boston was up 1 5/8 at 20 1/4, and Chemical Banking Corp. advanced 1 1/4 to 36. Wells Fargo was up 3 5/8 at 79 3/4 and Security Pacific Corp. added 2 1/8 to 39 1/2.

* AMR Corp., the parent of American Airlines, which started the recent fare war, was off 2 3/4 at 65 3/4. UAL Corp. was down 2 1/4 at 122 3/4, Delta Air Lines was down 7/8 at 57 7/8, and USAir Group Inc. was down 1 1/8 at 12.

Oil stocks moved lower amid sliding oil prices and more reports of lower earnings.

* Amoco was down 1 5/8 at 43 1/2, Arco fell 1 1/4 to 101 1/8, Chevron was down 3/4 at 66, and Exxon was off 1 1/8 at 58. Mobil, which said earnings were off by 82%, declined 3/8 to 61 3/4. Occidental Petroleum slipped 1/8 to 19 1/8, Pennzoil was down 5/8 at 45 3/4, and Texaco fell 3/4 to 58 1/2.

* Amerada Hess, which reported a first-quarter loss of $23.4 million, contrasted with a gain of $75.5 million a year earlier, fell 1 1/2 to 40.

* Caterpillar, which reported a $123-million loss for the first quarter but said it expects to return to profitability now that strikers are back on the job, rose 2 to 56 3/4.

* Drug stocks slumped, with Dow component Merck off 2 3/8 to 142 5/8. Traders noted some wariness ahead of a report on March sales of durable goods, due this morning.

In overseas trading, the Tokyo stock market broke its three-day losing streak with a moderate gain. The 225-share Nikkei average closed up 51.79 points at 16,839.12.

In London, shares ended weaker with the Financial Times 100-share average finishing 18 points down at 2,607.8.

Buy orders from foreign investors and institutions bolstered the Frankfurt market. The 30-share DAX average closed up 6.80 points at 1,753.30.

Credit

The bond market has been concerned about a potential oversupply of securities because of upcoming auctions. A surplus of bonds would drive down prices.

But the first of a series of auctions in coming weeks went off as expected, and the market had little reaction to the sale of two-year notes, money market economists said.

The price of the Treasury’s bellwether 30-year bond fell 3/16 point, or $1.88 per $1,000 in face amount. Its yield rose to 8.03% from 8.02% late Tuesday.

Yields on the auctioned Treasury notes fell to the lowest level in two months. The average yield was 5.43%, down from 5.85% at the last sale March 24.

A total of $14.8 billion in notes were sold out of bids of $35.7 billion--reflecting relatively slack demand that could raise concerns for coming auctions, said Elliott Platt, research director at Donaldson, Lufkin & Jenrette Securities Corp.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3.625%, the same as late Tuesday.

Currency

The dollar fell against all major currencies except the Canadian dollar in dull trading.

Analysts said trading was uneventful. The only significant move came overnight in the British pound, which posted a healthy gain on the belief that political stability has returned after the country’s general election earlier this month.

In New York, the British pound rose to $1.763 from $1.750 late Tuesday. The dollar slipped to 134.18 Japanese yen from 134.25 yen on Tuesday. Against the German mark, the dollar fell to 1.662 marks, down from 1.670 marks.

Commodities

Corn futures prices dropped sharply amid mostly speculative selling after the May delivery price hit an eight-month low.

Most other grain and soybean prices also fell on the Chicago Board of Trade.

On other commodity markets, oil futures fell, precious metals were mixed, and livestock and meat futures retreated.

Corn for May delivery fell 5.25 cents, more than half the permitted 10-cent daily limit, to $2.513 a bushel.

Meanwhile, light, sweet crude oil for June delivery fell 33 cents to $20.11 a barrel on the New York Mercantile Exchange.

Profit taking erased about a third of Tuesday’s gain in gold futures prices on New York’s Commodity Exchange. Silver extended Tuesday’s advance. Gold for current delivery dropped $1.80 to $339.30 an ounce, while May silver rose 2.3 cents to $4.018 an ounce.

Market Roundup, D8