NEW YORK, OCT. 2 -- The Dow Jones industrial average, up as much as 34 points at one point, ended the day off 10 points after a steady surge of sell orders from program traders hit Wall Street during the final hours of trading.
The retreat came despite a second consecutive sharp drop in oil prices, which in the past two months have been a signal for stocks to advance. The bond market was also firm throughout the day.
Much of the enthusiasm early in the day came from pension and mutual funds that had been on the sidelines since Iraq's invasion of Kuwait in early August. "What we've seen is pure institutional buying," said chief trader Thomas Gallagher at Oppenheimer & Co. "They're buying all sorts of household names -- stocks where they can put money to work in a hurry."
Strategist Charles Casazza at Cowen and Co. exemplified the bullish persuasion. "If interest rates can continue to move downward," he said, "our projections of future price-earnings ratios in stocks will begin to look a lot better than they have since early August.
Although much of the afternoon's backtracking was attributed to technical factors and index-arbitrage selling, two developments may have served to dampen sentiment, traders said.
At midafternoon, the stock of Dow component Primerica was halted after falling 2 3/8 to 17 5/8 because of an order imbalance. Primerica management announced it knew of no reason for the stock's descent. But wild rumors abounded, including one that the company would buy another brokerage firm.
At the close, the Dow stood at 2505.20, down 10.64. Advances narrowly outpaced declines on the Big Board in heavy trading.
The American depositary receipts for Japanese stocks also posted broad gains after Monday night's huge 13 percent rebound in Tokyo's stock market.
Unisys dropped 1 1/8 to 3 7/8, the most actively traded issue on the New York exchange, following the company's announcement last week that it was suspending dividend payments. Moody's yesterday lowered its rating of the company's stock.
The Dow transports closed up 21.64 at 894.79, but much of the gain was attributed to the 8 5/8 point move in UAL stock. The utilities eased 0.56 to 202.78.
Among broad stock indexes, the Standard & Poor's 500 was up a meager 0.27 point at 315.21 and the NYSE Composite gained 0.37 at 172.59. But the Value Line fared better, rising 1.52 to 232.33, the Amex Market Value rose 1.19 to 309.63 and the Nasdaq Composite gained 1.74 to 356.39.