Dow Backtracks, Loses 22.05 Points

NEW YORK â€”  The stock market fell Wednesday, relinquishing most of the advance made earlier this week and reflecting investors’ worries about both rising inflation and higher interest rates in the near future.

The Dow Jones industrial index, which rose a total of 26 points Monday and Tuesday, fell 22.05 points, closing at 2,036.31.

Traders blamed the weaker stock prices on a lower bond market and growing concern that Friday’s employment report will show that the economy is very strong. Too robust an economy could prompt the Federal Reserve to raise interest rates, they said.

‘The Programs Zapped Us’

The market’s steep decline in the final 40 minutes of trading was caused by round after round of computer-driven selling, traders said. “It was another sedate and quiet market until the programs zapped us,� said analyst Michael Metz of Oppenheimer & Co.

Declining issues outnumbered advances by more than 5 to 3 on the New York Stock Exchange.

Big Board volume slowed to 141.32 million shares from 176.92 million in the previous session.

Alan Greenspan, chairman of the Federal Reserve Board, said Wednesday that he looks for continuing improvement in the nation’s trade deficit.

However, Greenspan added in written responses to questions from the Senate Banking Committee, the trade improvement could lead to increased inflation unless domestic spending is restrained.

Analysts said those comments pretty well summed up investors’ mixed feelings at the moment about the economic outlook.

If the Labor Department’s monthly report due out Friday shows continuing strength in employment growth, they observed, traders might interpret it as a portent of credit-tightening by the Fed.

Strong Gain for Conseco

Losers among the blue chips included International Business Machines, down 1 3/8 at 113; Philip Morris, down 1 3/4 at 86 1/2; General Electric, down 1 at 39 7/8; General Motors, down 7/8 at 76, and American Telephone & Telegraph, down 5/8 at 26 3/8.

USG climbed 1 5/8 to 46 in active trading. Desert Partners made a new takeover proposal for the company with a deal involving a combination of cash and securities.

Conseco posted the day’s best percentage gain, jumping 2 1/8 to 13 3/4. The company said a management group led by its chairman and president made a buyout proposal at $13.50 a share.

Allegis gained 5 to 90. A union representing pilots at the company’s United Airlines raised the possibility of a $110-a-share cash merger offer if the union prevails in a court action filed last week.

Arkansas Best rose 5/8 to 23 3/8, touching a new 52-week high. A $20-a-share bid for the trucking company by a venture of two partnerships announced on Monday has touched off speculation on Wall Street about the possibility of a higher offer or offers.

Coleco dropped 3/8 to 2 1/2. On Tuesday the loss-plagued company said it laid off 475 employees.

Indexes Decline

The NYSE’s composite index lost 1.27 to 147.30.

The Wilshire index of 5,000 equities closed down 19.608 at 2,602.513.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 169.67 million shares.

Standard & Poor’s industrial index fell 3.17 to 303.53, and S&P;’s 500-stock composite index was down 2.68 at 260.32.

The NASDAQ composite index for the over-the-counter market dropped 0.61 to 381.62. At the American Stock Exchange, the market-value index closed at 302.54, down .68.

In London, stock prices declined Wednesday after the government said it would refer the Kuwaiti government’s acquisition of a British Petroleum Co. stake to the monopolies commission.

The Financial Times 100-share index finished down 12.5 The index’s best level was 2 points up, hit as the trading day began.

Volume was a moderate 427.4 million shares, compared to Tuesday’s 335 million shares.

The Tokyo market was closed for a second day of holidays. It will reopen Friday.