NEW YORK — The stock market turned downward Wednesday as the mild rally of the past four sessions faded.
Oil stocks were generally weak but some airlines advanced in a fairly active session.
The major market indicators showed a mixed trend with the Dow Jones average of 30 industrials, up 10.71 points in the past four sessions, declining 2.98 to 1,249.78.
Volume on the New York Stock Exchange came to 101.27 million shares, against 100.15 million on Tuesday.
Analysts said traders apparently were too uncertain about the outlook for interest rates and the economy to follow through on the recent upswing in stock prices.
In a speech prepared for delivery in Tokyo, Preston Martin, vice chairman of the Federal Reserve, said a "growth recession must be considered a real threat" in the United States.
In Washington, meanwhile, Paul A. Volcker, the Fed's chairman, hinted that the Fed hadn't taken any steps lately to ease credit but might consider the possibility in the near future.
Record Treasury Sale
Brokers said investors also were proceeding cautiously as the Treasury continued its record sale of $20.5 billion in bonds and notes, which began Tuesday and continues through today.
Interest rates rose in the credit markets Wednesday. Rates on short-term Treasury bills climbed about 5 basis points, or hundredths of a percentage point. Prices of long-term government bonds, which move in the opposite direction from interest rates, fell more than $5 for every $1,000 in face value.
Oil stocks came under pressure after a prominent Wall Street analyst recommended taking profits in a few issues in the group. Mobil fell 7/8 to 31, Royal Dutch Petroleum fell1 to 57 1/2, Atlantic Richfield fell 1 1/8 to 62 1/8, Texaco fell 1 5/8 to 37 1/8 and Amoco fell 1 1/8 to 64 1/2.
Gainers in the airline group included UAL, up 2 1/2 at 46, and AMR, up 1 at 42.
Tootsie Roll Industries posted one of the day's biggest percentage advances, climbing 4 to 47 3/4. The company reported earnings for the first quarter of 73 cents a share, up from an adjusted 48 cents in the comparable period a year earlier.
Toys 'R' Us gained 1 3/4 to 35. The company reported a 31.2% sales increase for the fiscal quarter ended May 5.
Bond prices fell in moderate trading as traders' hopes dimmed for an imminent cut in the Federal Reserve System's discount rate, the interest on central bank loans to banking institutions.
But credit markets got a slight lift late in the day when the Treasury Department said it sold $6.5 billion in 10-year notes at the lowest yield in two years.
The average annual yield on the new notes was 11.30%, down from 11.36% at the previous quarterly auction in February and the lowest yield for such an issue since the 10.16% of May, 1983.