NEW YORK — The stock market went nowhere in a quiet session Thursday, bogging down after the rally of the past two days.
The Dow Jones average of 30 industrials, which gained 27.70 points in trading on Tuesday and Wednesday, slipped back 1.69 to 1,781.21. Volume on the New York Stock Exchange amounted to 128.05 million shares, down from 143.55 million the day before.
Analysts said traders were encouraged by the market's advance in recent days, even though it has been interrupted periodically by bouts of selling. But they said participants in both the bond and stock markets were proceeding cautiously as they awaited Friday's report from the Labor Department on the employment situation for September.
The August employment data seemed to signal a pickup in the pace of business activity. Other statistics for that month, however, provided little support for that view. Thus, Wall Streeters will be watching closely to see if the September figures stay on the strong side.
Brokers also noted that stocks, which were aided by declining interest rates earlier in the week, didn't get any help from that quarter in Thursday's trading. Rates were mixed in the credit markets, showing small or no changes.
Precious metals stocks were one of the session's few bright spots, responding to a renewed rise in gold prices. ASA Ltd. climbed 2 3/8 to 39 7/8, Homestake Mining rose 1 3/4 to 28 7/8, Campbell Red Lake Mines rose 1 to 20 7/8, Newmont Gold climbed 1 to 16 1/8 and Hecla Mining rose 1 to 13 1/8.
The price of gold for October delivery gained $12 to $437.20 per ounce on the Commodity Exchange in New York.
Most retailing issues also gained ground, with K mart up 1 at 47 3/4, J. C. Penney up 1 1/8 to 72 1/8, Federated Department Stores up 1 3/8 at 87 1/8 and Sears, Roebuck 1/8 higher at 41 5/8.
However, Zayre fell 1 3/8 to 23. The company said it expected earnings for the quarter ending Oct. 25 to fall short of comparable year-ago levels.
Schlumberger rose 1 3/4 to 34 7/8. Late Wednesday, the company named Evan Baird as its chief executive, replacing Michel Vaillaud, in what some Wall Streeters saw as a sign of possible further corporate changes to come.
USX was actively traded, down 1/8 at 24 5/8. The stock has been the subject of recurring takeover speculation in recent weeks.
In the overall tally on the Big Board, advancing issues held a very slight edge on declines.
Long-Term Bonds Off Slightly
Interest rates finished the day's lackluster session just about where they started. Long-term government bonds made the biggest movements in the credit markets, with prices falling slightly.
Even a Federal Reserve Board report showing that the nation's basic money supply surged $4.3 billion in the week ended Sept. 22 failed to stir interest among bond traders, said Raymond W. Stone, chief financial economist of Merrill Lynch Capital Markets.
The increase in M1 was about double what many analysts had expected for the period. But Stone noted the markets have been ignoring M1 lately, knowing that the Fed attaches much greater significance to broad economic trends in the formation of its credit policy.
Mitchell Held, an economist with Smith Barney, Harris Upham & Co., said bond prices got a brief boost from afternoon buying sparked by a rumor that the Japanese government had decided to lower the country's official loan rate.
The buying subsided when the rumor turned out to be untrue.
A number of economists believe the Fed will refrain from cutting the U.S. discount rate until Japan and West Germany trim theirs. Discount rates are the interest central banks charge on loans to financial institutions, and declines in these key rates often drive down other credit charges.
In the secondary market for Treasury securities, the price of the closely watched 30-year bond was off about 3/8 point, which nudged its yield up to 7.63% from 7.6% late Wednesday.
Prices of short-term governments edged up 1/16 point and intermediate maturities ranged from up 1/16 point to down 3/32 point. The Treasury's 20-year bond slid 5/16 point, according to the investment firm Salomon Bros.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, closed at 117.23, down 0.5 from late Wednesday. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, slipped 0.51 to 1,226.53.
In corporate trading, industrials fell point and utilities were off 1/8 point in light to moderate trading.
Among tax-exempt municipal bonds, dollar bonds declined 1/8 point while general obligations gained 1/8 point in low volume.
Yields on three-month Treasury bills held at 5.19%. Six-month bills were unchanged at 5.36%, and one-year bills moved down 1 basis point, or a hundredth of a percentage point, to 5.5%.
The interest rate on federal funds, which are reserves that banks lend each other overnight, traded at 5.875%, compared to 6% late Wednesday.