NEW YORK — The stock market turned in a mixed showing Wednesday, leveling off after Tuesday's strong rally.
But some energy and transportation stocks attracted heavy buying interest in an erratic session.
The Dow Jones average of 30 industrials rose 4.12 to 2,342.19 on top of Tuesday's 51.85-point gain.
Volume on the New York Stock Exchange came to 196.56 million shares, against 192.29 million the day before.
The market's upsurge Tuesday was attributed to increased confidence about the outlook for the dollar and interest rates.
On Tuesday, the Treasury began a three-day quarterly financing with an auction of three-year notes. In the view of many observers, a successful Treasury financing might well be a signal of new stability for the dollar in foreign exchange and interest rates in this country.
However, bond prices fell sharply amid disappointment in the credit markets over results of the sales of the 10-year notes, the second phase of the Treasury's quarterly refinancing auction.
Santa Fe Up 5 1/2
In the stock market, Santa Fe Southern Pacific jumped 5 1/2 to 48 3/4. The investment firm of Kohlberg Kravis Roberts & Co. declined comment on reports that it was readying an offer to buy the company out.
In the airline sector, Trans World Airlines climbed 2 to 26 7/8 and Allegis, the parent of United Airlines, added 2 to 70. Such gains helped the Dow Jones average of 20 transportation stocks rise 18.79 to a new closing high of 964.64.
Burlington Industries picked up 4 5/8 to 63 1/8. Investor Asher B. Edelman and the Canadian company Dominion Textile raised the price of their bid for Burlington to $67 from $60 a share and began a tender offer.
In the energy sector, some stocks responded to a proposal by President Reagan for tax changes intended to stimulate domestic oil development. Among oil service companies, Schlumberger rose 2 3/4 to 45 1/8 and Halliburton gained 2 1/8 to 37.
Declining issues slightly outnumbered advances in the overall tally on the NYSE, with 760 up, 784 down and 413 unchanged.
Poor Demand Noted
In the bond market, the government's closely watched 30-year bond fell 1 3/32 point, or nearly $11.25 per $1,000 in face value. Its yield rose to 8.74% from 8.64% on Tuesday.
Analysts said the credit markets were disappointed in what they deemed poor demand by Japanese investors for the 10-year notes auctioned by the Treasury on Wednesday as part of its three-day $29-billion refunding sale.
In the secondary market for Treasury issues, prices of short-term governments were unchanged, intermediate maturities ranged 5/32 point to 7/8 point lower and 20-year issues fell 5/8 point, according to the financial information service Telerate Inc.
Yields on three-month Treasury bills fell 36 basis points to 5.40%, according to Telerate. Six-month bills were down 39 basis points at 5.69% and one-year bills dropped 8 basis points to 6.31%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 6.675%, unchanged from Tuesday.
In corporate trading, industrial bonds fell 1/2 point and utilities fell 1 point in moderate trading, the investment firm Salomon Bros. said.
Among tax-exempt bonds, general obligation issues fell point in light trading and revenue bonds were unchanged in light to moderate trading, Salomon Bros. said.