NEW YORK — The stock market gave up more ground Tuesday, failing in a daylong struggle to turn around after Monday's sharp decline.
At the close of trading, the Dow Jones average of 30 industrial stocks stood at 1,766.87, down 7.03. Declining issues outnumbered gainers by about two to one at the New York Stock Exchange.
Throughout the day the Dow Jones index had fluctuated between levels above and below the break-even point.
Analysts said many traders who weren't selling moved to the sidelines, stunned by the previous day's 36.14-point plunge in the closely watched index. Monday's drop was the seventh-largest point loss ever and its biggest since it took a record 61.87-point drop on July 7.
Volume on the NYSE totaled 115.69 million shares, down from 127.99 million on Monday.
Bond prices, which slumped severely Monday and helped bring the stock market down, rallied somewhat, with futures up sharply, "but this failed to do anything for the stock market except keep it from moving lower," said Hildegarde Zagorski, an analyst at Prudential-Bache Securities.
She agreed with other analysts who said that if the market falls below the general range of 1768.70--the low point in the recent slump, reached on July 15--the next resistance level would likely be in the 1,700 to 1,730 range.
Airline Issues Climb
Airline issues were mostly higher after some analysts were reported predicting higher traffic this summer. UAL Inc. was up 1 3/8 to 51 5/8, Delta rose 5/8 to 42, TWA rose 1/8 to 17 1/2 and Pan Am rose 1/8 to 5 7/8. Eastern was down 1/8 at 8 7/8.
Safeway Stores led the NYSE most-active list, falling 1 to 65 1/2, after jumping 4 1/2 to 66 3/8 on Monday. The company agreed to be bought out by Kohlberg Kravis Roberts & Co. for $69 a share in cash and securities, countering Dart Group's $64-a-share proposal.
Chase Manhattan was down at 38 7/8 after saying that it would sell its Computer Power unit to Merrill Lynch Capital Markets for $120 million.
IBM was down 1 1/8 at 131, while Digital Equipment was unchanged at 88 1/2 after reporting Monday that its quarterly earnings had more than doubled.
Mobil slipped 1/8 to 29 3/4, while Texaco dropped 1/8 to 29 7/8 and Diamond Shamrock remained unchanged at 10 7/8.
General Motors slipped 1/2 to 68 1/2 after saying it might have to close three of its North American assembly plants by the end of the decade.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 137.3 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,283, compared to 2,140 on Monday.
Standard & Poor's index of 400 industrials dropped 1.59 points to 258.92, and S&P's 500-stock composite index was down 1.46 to 234.55.
At the American Stock Exchange, the market-value index was down 2.88 to 260.80. The NYSE's composite index was 135.19, down 0.92.
30-Year Bond Gains
The credit markets staged a comeback with prices of some government bonds gaining about $10 for every $1,000 in face value. Long-term interest rates receded slightly.
The closely watched 30-year Treasury bond gained about 1 1/8 point, or $12.50 for each $1,000 in face amount, which pushed its yield down to 7.48% from 7.57% late Monday.
In the secondary market for Treasury securities, prices of short-term governments rose 1/8 point and intermediate maturities gained by between 5/16 and to 23/32 point, according to the investment firm of Salomon Bros.
The 20-year Treasury bond rose more than 1 full point, Salomon Bros. said.
In corporate trading, industrials jumped 1 point and utilities rose 1/2 point in medium trading volume.
Among tax-exempt municipal bonds, general obligations gained 1/2 point while revenue bonds rose 3/4 point in moderate activity.
Yields on three-month Treasury bills were down 4 basis points to 5.84%. Six-month bills fell 5 basis points to 5.87%. One-year bills were down 5 basis point at 5.86%. A basis point equals a hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 6.188%, down from 6.375% late Monday.