STOCKS : Market Takes Time to Reflect; Dow Dips 0.89

Stocks closed mixed in quiet trading Monday as investors took a breather after last week’s dizzying ride to new highs.

The Dow Jones industrial average, which climbed 32.87 points on Friday to a record 3,040.25, slipped 0.89 point to 3,039.36.

Declining issues outnumbered advances 817 to 747 on the New York Stock Exchange, as volume totaled just 130.57 million shares.

With many investors and traders taking vacations, volume is expected to be anemic all week.

Investors stayed focused on the Soviet Union, where events continued to unfold rapid-fire. Three Baltic states moved closer to independence and Soviet President Mikhail S. Gorbachev indicated that he wouldn’t stand in their way.

Last week, euphoria over the failure of the coup against Gorbachev--followed by a government report showing the U.S. economy gained steam in July--sent the Dow and broader indexes soaring to new heights.

Later this week, the market will get more insight into the recovery as the government reports July personal income, personal expenditures and leading indicators.

Among the market highlights:

* Some industrial stocks continued to rally after strong gains on Friday, when the government reported a huge jump in July durable goods orders. Clark Equipment rose 3/4 to 25 1/4, Owens-Corning gained 1 1/2 to 35, Nucor added 1 5/8 to 84, and Timken advanced 2 to 29 7/8.

* Some biotech stocks surged. XOMA rose 1 to 18 3/4 after a Cowen & Co. analyst recommended the stock, based on a new drug that fights deadly infections. Immune Response soared 2 7/8 to 22 3/8 on a recommendation by a Robertson, Stephens analyst. Another big biotech winner was Synergen, which jumped 5 5/8 to 54 1/2.

* Most defense stocks took another tumble on new reports about cost-overruns at McDonnell Douglas. McDonnell fell 2 1/8 to 51 1/8. Other losers included Lockheed, down 1 1/2 to 42 5/8; Northrop, off 7/8 to 29 1/4; Martin Marietta, off 2 1/4 to 55 3/4, and General Dynamics, off 5/8 to 41 3/4. But Logicon rose 1 to 34 5/8.

* Salomon Inc. climbed 2 1/4 to 26 on a report that CBS Chairman Laurence A. Tisch may have bought about 1.5 million shares of the scandal-tainted brokerage late last week, as the stock plunged.

* Toys R Us rose 2 to 35. Paine Webber issued a bullish report on the toy retailer’s August sales.

* Grocery retailer A&P; plunged 4 1/4 to 38 1/2 after projecting a drop of about 60% in its current-quarter earnings. The company cited the recession in the Northeast.

* Southland issues hitting new 52-week highs included Jacobs Engineering, up 1 3/8 to 27; satellite-relay firm IDB Communications, up 1 1/4 to 12 1/4 after trading as high as 13; and nuclear-medicine firm Syncor International, up 1 5/8 to 20 7/8. All three have been rising steadily lately on expectations of strong earnings growth.

Overseas, Tokyo stocks weakened, as the Nikkei average fell below 22,000 for the first time in four sessions. The closed down 473.07 points or 2.1% to 21,592.27.

Frankfurt shares ended a busy session higher, with the DAX index closing up 26.95 points at 1,654.19.

In Mexico City, the Bolsa index jumped 26.61 points to a new record 1,233.20.

The London stock market was closed for a holiday.

Credit

Treasury bond prices continued to slump in quiet trading as reaction to an unexpectedly buoyant economic report last week continued to chill activity.

The price of the Treasury’s 30-year bond, which was down 7/8 point Friday, fell another 3/16 point, or $1.88 per $1,000. Its yield rose to 8.14% from Friday’s 8.13%. The yield was at 8.06% as recently as mid-month.

The Treasury is selling new short-term bonds today and Wednesday, and the reception investors give the securities will be a test of interest rate expectatons in the months ahead. The Treasury sells new 2-year notes today and 5-year notes on Wednesday.

The federal funds rate, the interest on overnight loans between banks, was quoted at 5.675%, up from 5.438% Friday.

Currency

The dollar closed mixed in listless foreign exchange trading as investors appeared to wait out the session while evaluating the dramatic events in the Soviet Union.

The dollar ended at 1.749 German marks in New York, up from 1.748 Friday. It rose against the Japanese yen to 136.95 from 136.90 Friday.

Against the British pound the dollar rose to $1.680, more expensive than $1.678 late Friday.

Commodities

Grain and soybeans prices surged on the Chicago Board of Trade after President Bush released previously allocated export credits to help the U.S.S.R. buy grain to get through the winter.

Wheat futures for delivery in September settled 6.50 cents higher at $3.06 a bushel; September corn settled 5 cents higher at $2.545 a bushel; September soybeans were 15 cents higher at $5.8275 a bushel.

October light, sweet crude was 16 cents higher at $21.97 a barrel in New York Merc.

Precious metal futures on New York’s Comex were mixed in quiet trading. August gold was $1.80 higher at $355.20 an ounce; August silver was 0.60 cent lower at $3.93.

Market Roundup, D10