By Jerry Knight

Washington Post Staff Writer

Wall Street paused to honor the lost Columbia astronauts today, giving a formal tribute to the shock that left the financial markets in an unusually subdued mood.

The New York Stock Exchange halted trading for two minutes beginning at 11 a.m., observing a moment of silence to commemorate the space shuttle tragedy.

Surprisingly, investors extracted only small penalties from the stocks of companies involved in the shuttle program.

Shares of Boeing Corp. lost 54 cents, around 1.7 percent. The stock of Lockheed Martin Corp. of Bethesda dropped about $1.60, a little more than 3 percent. Hardest-hit was the stock of Alliant Techsystems, a small contractor that helps build the craft's rocket boosters; Alliant shares dropped about $6.50, a loss of nearly 12 percent.

Stock prices rose for the second day in a row, but there was no euphoria among the Wall Street professionals who, like so many Americans, spent a stunned weekend focused on the tragedy.

The Dow Jones industrial average rose 56 points to 8,109.82.

The Standard & Poor's 500 stock index was up nearly 5 points at 860.32.

The Nasdaq Stock Market composite index gained 3 points to close at 1,323.79.

The markets seemed to pay little heed to the federal budget issued today by the White House. Budget announcements often can trigger reactions either to specific programs that benefit certain investments or to the perceived impact of the budget on the economy, but there was no sign of either effect today.

The stock market ought to benefit from the latest of President Bush's tax restructuring proposals, which would make it possible for millions of small investors to put most of their stock investments into tax-free accounts so they would not pay income taxes on their gains.

The proposal would consolidate several specialized savings programs into two new accounts, one for retirement, the other for other kinds of savings. Every person would be allowed to invest up to $7,500 a year in each of the two accounts. Contributions would not be tax deductible, but gains and withdrawals from the accounts would not be taxed.

But like the president's proposal to eliminate the federal income tax on corporate dividends, the new savings system has produced little cheering from Wall Street. That may be because, Washington pundits say, once war breaks out in Iraq, all the president's economic proposals will slide onto the back burner.