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RISE IN STOCKS MAY NOT SIGNAL RECOVERY

As it climbed to record highs in the first half of 1991, the stock market registered confidence that better times are ahead for the economy.

But investors seemed to have trouble visualizing what a recovery from the recession would look like, or where it might eventually lead.The result was an advance in stock prices that was given to big mood swings and frequent changes in its leading cast of characters.

"Talk about confusing - economists can't decide whether the glass is half full or half empty, or even if they're looking at the right glass," said James Stack in his InvesTech advisory letter.

The stock market didn't appear to have much better luck in sorting the whole thing out.

As the market racked up especially strong gains early in the year, growth stocks in glamor businesses like health care and biotechnology led the parade.

By May, when analysts began to proclaim that an upturn in business activity was at hand, the spotlight shifted to cyclical issues in industries such as auto manufacturing, paper and forest products, and chemicals.

Then, as midyear approached, the whole market retreated from its spring peaks in an atmosphere of caution and uneasiness.

So the investment and economic themes that emerge from a survey of the market's first-half performance present a diverse picture.

Apparel retailers, with a rise of nearly 60 percent, scored the best gain in the rankings of 80-plus stock groups followed by Dow Jones & Co. for the year through June 21.

Securities brokers, up 58 percent, were a close second, showing the benefits of signs that Wall Street firms might at last be pulling out of the slump that had plagued them ever since the market crash of 1987.

Medical and biotechnology stocks ranked third, up nearly 50 percent.

At the same time, bulls on energy experienced big disappointments in both the oil and utility industries.

Oil stocks lagged behind the market rally after it became clear that the Gulf war wasn't going to touch off the surge in oil prices so many analysts had predicted.

Utilities were hurt in the spring by an upswing in long-term interest rates, which increased the returns available on bonds in the competition for yield-conscious investors' favor.

Another jolt came in the waning days of June, when Columbia Gas System suspended its dividend, citing losses it was facing on commitments to buy natural gas. In a single week the company's shares lost more than half their value.

About that time, investors began to grow increasingly jittery about corporate earnings prospects in general, even as signs of economic recovery increased.

In the last week of the first half, through Friday, the Dow Jones average of 30 industrials fell 58.81 points to 2,906.75. That left the average's gain since New Year's at 273.09 points, or 10.37 percent.

Other readings for the week showed the New York Stock Exchange composite index down 3.40 at 203.47; the NASDAQ composite index for the over-the-counter market off 9.91 at 475.91, and the American Stock Exchange market value index down 7.24 at 358.12.

That kind of action was enough to put many analysts on their guard as they looked ahead to the second half of the year.

"The market is richly valued, and forthcoming second-quarter earnings reports will contain more disappointments than pleasant surprises," said Norman Fosback, editor of the advisory letter Market Logic.