Stocks slipped in choppy trading Friday after a late flurry of computer-driven sell programs wiped out earlier gains and pulled the Dow farther away from the 3300 barrier.
The Dow Jones industrial average, which fell back 13.87 points Thursday, lost another 1.78 to 3267.67. The key barometer was up more than 20 points earlier."It's a tough call," said Joseph Barthel, director of investment strategy at Fahnestock & Co. in Great Neck, N.Y.
"If it hadn't been for the program activity, the market could have closed higher considering the string of positive economic news," he said.
"My suspicion is we're getting close to a correction. The S&P (500 index) has been correcting these past few weeks. There could be a correction next week."
Among the broad gauges, the New York Stock Exchange composite index eased 0.54 to 228.21, and Standard & Poor's 500-stock index fell 1.16 to 412.70. The price of an average share lost 9 cents.
Declines nosed out advances 884-814 among the 2,229 issues crossing the NYSE tape.
Final floor volume amounted to 221,111,000 shares, compared with 215, 120,000 in the same period Thursday.
Stocks ended mixed on the American Stock Exchange and in over-the-counter trading. Key U.S. government securities were higher.
The 30-year bond was ahead 22/32 to 102 13/32 for a yield of around 7.79 percent, down from 7.85 percent late Thursday.
Alfred Goldman, market strategist with A.G. Edwards & Sons Inc. in St. Louis, said earlier in the day he thought the market was "making a mistake by climbing on the basis of the big revision in the GDP. The big inventories build up is the bad news. It's like coming in through the back door and not going out the front door."
He said the bond market responded "intelligently to the GDP report by looking at the inventories build up."
The bond market, which usually reacts negatively to signs of economic strength because they tend to heat up inflation in the long term, initially dipped on the news but stabilized afterward.
Ralph Bloch, senior vice president and chief market analyst at Raymond James & Associates in St. Petersburg, Fla., said another underlying reason for the market's initial rebound was the fact that "yesterday was not as bad as the Dow looked. The breadth of the market was up all day, which was a real plus."
"My point is yesterday's figures were a clue that the market is going up today. The GDP also helped the stock market," he added.
Bloch also said Friday's session saw the "return - after a few days of profit-taking - of the cyclicals."
Analysts said the market opened higher, drawing some support from firm bond prices, better-than-expected economic news and mostly steady overseas markets.
The Commerce Department said the economy grew at an upwardly revised annual rate of 0.8 percent in the fourth quarter, pushed higher by better-than-expected showings in business inventories and personal spending. Economists had expected a 0.6 percent annual rate.
Gross domestic product grew at an annual rate of $9.5 billion in the fourth quarter to $4.872 trillion. In its initial estimate last month, the department said it grew at an annual rate of 0.3 percent in the October-December period.
On the trading floor, Callaway Golf Co. paced the Big Board actives, closing at 323/8 on its initial trading. The Carlsbad, Calif.-based golf club maker's 2.6-million-share offering of common stock was priced at $20 a share.
Glaxo Holdings followed, inching up 1/8 to 28. National Medical Enterprises was third, falling 11/4 to 145/8 after saying it expects fiscal third-quarter earnings of around 25 cents a share vs. 39 cents a year ago.
Among some of the blue chips, IBM fell 3/4 to 87, Philip Morris edged up 1/4 to 763/4, Merck lost 3/4 to 1575/8, and General Motors rose 11/4 to 373/8 after auto stocks got a rating upgrade from Merrill Lynch. Ford Motor gained 1 to 363/4 and Chrysler rose 3/4 to 17.
Volume of NYSE-listed issues, including trades in stocks on regional exchanges and in the over-the-counter market, totaled 263,606,600 shares, compared with 262,428,440 traded in the previous session.
The Amex Market Value Index was unchanged at 416.09, while the average price of an Amex share was also unchanged. Advances edged declines 315-297 among the 881 issues traded. Composite volume was 17, 076,865 shares, compared with 21,015,340 traded Thursday.
Wang Laboratories led the Amex actives, inching up 1/8 to 63/4.
In over-the-counter trading, the National Association of Securities Dealers composite index slid 0.48 to 633.47. Advances led declines 972-825 among the 2,844 issues traded.
Novell led the OTC actives, falling 11/4 to 613/4 despite reporting Thursday fiscal first-quarter earnings of 34 cents a share vs. 21 cents a year ago.
MCI Communications followed, inching up 1/4 to 35 after announcing late Thursday it had been awarded a two-year contract to provide international long-distance services to all federal departments and agencies.