NEW YORK — The stock market declined slightly Wednesday after making its second unsuccessful run at the 1,800 level in the Dow Jones industrial average.
At the same time, bond prices fell with municipal issues taking a particularly heavy beating, while short-term interest rates edged slightly lower.
Analysts said uncertainty over prospects for oil prices and interest rates helped keep markets at bay.
The Dow Jones average of 30 industrials, up nearly 6 points in early trading and down about 8 at its mid-session low, finished with a 1.92 loss at 1,787.95.
Volume on the New York Stock Exchange came to 149.99 million shares, against 148.01 million Tuesday.
In Tuesday's trading, the Dow Jones industrials touched 1,800 for the first time. After that the market pulled back, although it still finished with a good-size gain.
1,800 Level Debated
Opinions on Wall Street were widely divided about whether 1,800 in the Dow would turn out to be an important psychological stumbling block for the long bull market.
Some observers contend that it is likely to be a difficult obstacle. Others argue that professional traders, taking their cues from fluctuations in stock-index options and futures, could quickly propel the market past the 1,800 level.
Several of those options and futures expire at the end of this week. The approach of that deadline could well keep the market volatile between now and then, brokers said.
Meanwhile, many traders apparently played it cautious as they awaited the outcome of efforts by the Organization of Petroleum Exporting Countries to put together a production-sharing agreement in a bid to shore up world oil prices.
Burroughs fell 3 7/8 to 64 3/8 after the company projected a significant drop in its first-quarter earnings.
Selling spilled over into several other leading computer and technology issues.
International Business Machines fell 3/4 to 151 5/8, Digital Equipment 3 3/8 to 160 7/8, Honeywell 1 1/8 to 76 and Hewlett-Packard 1 to 43 1/8.
Eli Lilly jumped 7 7/8 to 67 1/8 on reports that a new Lilly anti-depressant drug was showing the side effect of promoting weight loss.
Auto Stocks Strong
Auto issues were strong, with General Motors up 3/4 at 84 3/8, Ford Motor 2 5/8 at 76 and Chrysler 1 7/8 at 43 3/8. The stocks were aided by news that Nissan Motor's U.S. subsidiary plans to raise prices as a result of the dollar's recent decline against the Japanese yen.
Litton Industries, discussed as a possible buy-out candidate, rose 1 to 85 1/2.
In the daily tally on the Big Board, declining issues held a narrow edge on those advancing. The NYSE's composite index dipped 0.13 to 135.57.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,753, compared to 2,825 on Tuesday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 175.72 million shares.
The Wilshire index of 5,000 equities closed at 2,418.985, down 1.883.
Standard & Poor's index of 400 industrials was unchanged at 260.39, and S&P's 500-stock composite index was down 0.18 at 235.60.
The NASDAQ composite index for the over-the-counter market rose 0.17 to 371.69.
At the American Stock Exchange, the market-value index closed at 266.20, down 1.49.
In the credit markets, municipal bond trading ground to a virtual halt for a while as dealers assessed the implications of a provision in tax reform legislation before the Senate Finance Committee.
At the end of a highly volatile day, revenue bonds were down 1 points and general obligations were 1 1/2 points below Tuesday's closing level.
Government Issues Retreat
Government securities gave back gains recorded late Tuesday after the government unveiled a financing package that did not include an auction of 20-year bonds, as had been expected.
The financing operation includes an auction of $7 billion in four-year notes next Tuesday and a sale of $6.5 billion in seven-year notes next Wednesday.
Analysts said the Treasury's decision not to sell 20-year bonds next week will leave the supply of new long-term government debt rather scarce, a condition that tends to raise prices for existing issues.
Speculation about whether major oil producing nations will succeed in stabilizing crude prices preoccupied traders, analysts said.
The drop in petroleum prices was one of the key forces behind the bond market rally this year because inexpensive oil would help hold down inflation.
GNP Report Downplayed
On the domestic front, traders paid little attention to a Commerce Department report showing that the economy grew at a 0.7% annual rate during the fourth quarter of 1985, not 1.2% as estimated last month.
In the secondary market for Treasury bonds, short-term securities were off by 1/32 point to 3/32 point and intermediate governments fell by 5/32 point to 17/32 point. A key 20-year bond dropped 9/16 point, and the benchmark 30-year issue also fell by 9/16 point, according to the investment firm of Salomon Bros.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, closed at 116.59, up 0.01 from Tuesday's close.
The Shearson Lehman Bros. composite government securities index, which makes a similar measurement, fell 2.66 to 1,220.32.
In corporate trading, industrials were unchanged in quiet trading, and utilities gained point in light volume.
The yield on the benchmark 30-year Treasury bond rose to 8% from 7.96% late Tuesday.
Yields on three-month Treasury bills slid seven basis points to 6.46%. Six-month bills were down two basis points to 6.55%, while one-year bills were unchanged at 6.58%.