NEW YORK, JAN. 19 -- A late afternoon selling spree squelched a brief stock rally today, capping a nervous, low-volume session that some Wall Street strategists called typical of the market since October's collapse.

"People are still very worried, especially the professional investor community," said Philip C. Puccio, senior vice president and manager of institutional trading at Dillon Read & Co. "The volatility is just horrendous and lack of volume is depressing. So we're kind of in a holding pattern."

The Dow Jones average of 30 industrials fell sharply at the opening, rose slightly by midafternoon and slid again in the last hour of trading, ending the session down 27.52 points at 1936.34.

Broader market indices also fell in the late afternoon, but the overall market result was mixed. In New York Stock Exchange composite trading, the number of gaining and losing issues was about even: 775 down, 762 up and 440 unchanged. Big Board volume totaled 153.55 million shares, up from 135.10 million shares Monday.

Analysts said the initial selloff was incited by Japan's December trade report, which showed that its surplus with the United States had widened. The report dampened investor enthusiasm that had arisen from a large drop in the November U.S. trade deficit reported last Friday.

Another selling catalyst was the earnings report of International Business Machines Corp. Despite a 50 percent increase in fourth-quarter earnings by the computer giant, investors apparently feared that the jump was caused largely by the temporary impact of tax breaks and the dollar's deflated value.

IBM, an important component of the Dow Jones average, tumbled 6, to 111 3/4, in heavy trading and dragged other stocks down. Market analysts described it as a classic bear-market overreaction that has typified trading in the aftermath of the Oct. 19 collapse.

Other computer-related stocks also fell. Digital lost 1 3/4 to 119 3/4, Compaq lost 3 1/8 to 48 7/8 and Hewlett Packard lost 3/4 to 55 1/8. A notable exception was Honeywell, which gained 3/8 to 59 1/4. The company reported favorable fourth-quarter earnings.

Among the blue-chip losers, International Paper fell 1 7/8 to 38, DuPont fell 1 to 80 1/4, Procter & Gamble fell 1 to 85 1/8 and General Motors fell 1 3/8 to 63.

In takeover-related trading, Santa Fe Southern Pacific rose 1/2 to 44 7/8. Henley Group Inc. intensified efforts to acquire the railroad. Sterling Drug lost 1/8 to 77 1/2. The drug concern enlisted government help to thwart a takeover by Swiss pharmaceutical giant F. Hoffmann-La Roche.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 175.446 million shares.

The NYSE composite index measuring all listed issues fell 1.11 to 140.13.