NEW YORK — The stock market gave ground in quiet trading Wednesday, beginning the second half of 1987 on a hesitant note.
The Dow Jones index of 30 industrials, down 28.38 on Tuesday, dropped 8.77 to 2,409.76.
Volume on the New York Stock Exchange slowed to 157.04 million shares from 165.48 million in the previous session.
Analysts said a lull seemed to have settled in after investing institutions completed their last-minute maneuvers to ready their portfolios for midyear reports to their clients.
There was widespread talk on Wall Street that the market might be "overextended" after the Dow's rise starting in late May, which took it to record highs as recently as last Thursday.
The advance failed to impress many observers because it was concentrated in a relatively small number of stocks and came on light volume.
Nevertheless, some brokers remained hopeful that the market might perk up again after the long Fourth of July weekend that begins at today's close, especially when large numbers of companies begin reporting their second-quarter earnings.
Santa Fe Southern Pacific rose 2 to 52 and led the NYSE active list on turnover of more than 3.4 million shares. On Tuesday, the Interstate Commerce Commission voted for a second time to reject the proposed merger of the Southern Pacific and Atchison, Topeka & Santa Fe railroads.
Reichhold Chemicals climbed 2 3/8 to 63 1/8. The company rejected a previously announced $52.50-a-share takeover offer from Dainippon Ink & Chemicals of Japan, describing the bid as inadequate.
Among blue-chip industrials, International Business Machines gained 1 1/2 to 164 and American Telephone & Telegraph added 3/4 to 28 3/8. General Electric dropped 3/8 to 54.
Unitrode fell 1 1/8 to 12 3/4. The company said it would have a substantial operating loss for the quarter ended Aug. 1 because of a suspension of shipments of some products after an audit by a Defense Department agency.
Bond Prices Climb
In the bond market, meanwhile, prices rose in quiet trading as investors awaited the release of June unemployment figures.
The Treasury's closely watched 30-year issue rose 9/32 point, or more than $2.50 for each $1,000 of face value, while its yield dipped to 8.47% from 8.50% on Tuesday.
"People are a bit hesitant to make a commitment before the unemployment figures tomorrow," said Harold Nathan, senior financial economist with Wells Fargo & Co. in San Francisco.
With the dollar stable in recent days, the credit markets have shifted their focus back to economic statistics, Nathan said, but with no major news to influence investors, bond prices have traded within a narrow range.
In the secondary market for Treasury bonds, prices of short-term governments rose 3/32 point, intermediate maturities were 1/16 point to 5/32 point higher and 20-year issues were unchanged.
Among tax-exempt municipal bonds, general obligations were unchanged in quiet trading and revenue bonds rose 3/8 point.
Yields on three-month Treasury bills were down 7 basis points to 5.63%. Six-month bills fell 9 basis points to 5.78% and one-year bills were off 7 basis points at 6.20%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.875%, up from 6.25% on Tuesday.