NEW YORK — The stock market was little changed in a drifting session Monday as lingering interest-rate worries took the momentum out of last week's rally.
The Dow Jones average of 30 industrials, down about 12 points for much of the session, closed with a loss of 0.81 at 2,640.18. The average rose 70.82 points last week.
Volume on the New York Stock Exchange came to 159.65 million shares, against 189.07 million Friday.
Interest rates rose in the credit markets Monday, leaving prices of long-term government bonds with losses of nearly $10 for each $1,000 in face value.
"The market took its cue from bonds which were under pressure all day," said Donald Crooks, trader at Morgan Stanley.
Technology stocks rose sharply, adding to gains made last week as investors focused on industry prospects for 1988.
Crooks said many of the technology stocks were boosted by remarks made at a major West Coast conference attended by analysts. Overall, he said, gains were not broad-based and volume was disappointing.
There was talk in the stock and bond markets that the Federal Reserve has already begun tightening credit, brokers said.
Investors fear higher interest rates will draw money out of the stock market and into the higher yields of the bond market and also make it harder for businesses to expand.
Ralph Bloch, chief technical analyst for Raymond, James & Associates, said he believed the markets were shaken by Federal Reserve Chairman Alan Greenspan's remarks that while inflation is not a major problem at the moment, if expectations of higher rates are built into prices, the central bank could be forced to raise the discount rate again.
The stock market, however, is currently underpinned by prospects of strong third-quarter earnings, Bloch said. They are due to be reported next week.
"The market could go through a couple of days of softness," Bloch said.
Entex climbed 3 to 23 and Arkla dropped 1/2 to 21 3/8, both in active trading. Entex, which had been planning to go private, agreed to be acquired by Arkla in a transaction calling for the exchange of 1.15 Arkla shares for each Entex share.
Zayre gained 2 3/8 to 34 5/8. The company said investor Edward J. DeBartolo Jr. had advised it that he planned to increase his Zayre holdings by at least 73,00 shares and might seek to gain control.
Metals stocks, which have benefited from rising prices and talk of increased general inflation, added to their recent gains. Phelps Dodge rose 1 to 54; Asarco 3/4 to 34; Alcoa 1 to 63 3/4, and Alcan Aluminium 1 to 37 3/4.
Auto issues, by contrast, were weak as companies in the industry posted a 6.4% drop in day-for-day sales of domestic cars for the last third of September. General Motors fell 1 1/8 to 81 3/8; Ford Motor was off 5/8 at 99 1/2, and Chrysler dipped 3/4 to 41 3/4.
Declining issues outnumbered advances by about 5 to 4 on the Big Board. The exchange's composite index edged up 0.01 to 183.44.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 185.74 million shares.
Standard & Poor's index of 400 industrials rose 0.18 to 383.46, and S&P's 500-stock composite index was up 0.01 at 328.08. The Wilshire index of 5,000 equities closed at 3,228.765 up 2.124.
The NASDAQ composite index for the over-the-counter market gained 2.02 to 453.62. At the American Stock Exchange, the market value index closed at 359.33, down 0.04.
In foreign trading British share prices, which some analysts expect to hit record high levels soon, closed at their day's lows Monday after Wall Street started heading down.
The Financial Times Stock Exchange index of 100 leading shares ended at 2,385.8 points, up 3.6, after being 17.7 ahead at one stage.
In Tokyo share prices finished slightly higher as heavy selling of shares in financial institutions was narrowly offset by demand for stocks in exporting companies, brokers said.
The Nikkei 225-share market index rose 11.74 points to 26,018.33, barely extending Saturday's 144-point gain.