Stocks Manage Slight Gain; Dow Rises 3.24

NEW YORK —  The stock market struggled to a small gain Wednesday, extending the rally of the previous session.

The Dow Jones average of 30 industrials, up 16.02 points on Tuesday, rose another 3.24 to 1,798.37.

Volume on the New York Stock Exchange came to 133.27 million shares, down from 138.47 million on Tuesday.

Analysts said traders remained cautious about the economic outlook. The government reported Wednesday morning that new orders for durable goods rose 2.1% last month. However, excluding the volatile category of defense orders, the increase was a more modest 1%.

Wall Streeters were also closely following the testimony of Paul A. Volcker, chairman of the Federal Reserve Board, before the Senate Banking Committee.

Volcker said the Fed would consider as “acceptable” above-target growth this year in the basic measure of the money supply known as M1. Recent growth in M1, he said, has stemmed from forces that do not reflect “excessive, and potentially highly inflationary, money creation.”

As expected, Volcker didn’t commit himself either way about the chances for further cuts in the discount rate, which was recently reduced to 6%--the third reduction this year.

Safeway Leads List

Safeway Stores led the NYSE most active list, unchanged at 60 5/8 on turnover of more than 5 million shares. The company is studying a sweetened $64-a-share takeover offer from Dart Group.

General Motors fell 2 to 72 3/4. GM reported lower second-quarter earnings, and the Wall Street Journal quoted sources at the company as saying management expects it to have an operating loss in the third quarter, though still showing a profit on the bottom line.

Xerox gained 2 7/8 to 52 5/8 on higher second-quarter profits from continuing operations.

Enron climbed 3 3/8 to 42 1/2 on rumors that an investor group might be planning a bid for the company. Enron said it knew of no reason for the rise in the stock.

E. F. Hutton, which reported a $4.7-million loss for the second quarter, dropped 3/4 to 34.

Hughes Tool fell 3/4 to 7. The company posted a quarterly loss and cut its dividend to 2 cents from 12 cents a share.

Floating Point Systems dropped 2 5/8 to 18 1/2 on top of a 12 3/8-point slide Tuesday, when the company said its earnings for the fiscal year ending Oct. 31 would fall short of expectations.

Gainers Edge Losers

In the overall tally on the Big Board, about eight issues rose in price for every seven that lost ground.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 162.28 million shares.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,659, compared to 2,587 on Tuesday.

Standard & Poor’s index of 400 industrials rose 0.38 to 263.65, and S&P;’s 500-stock composite index was up 0.49 at 238.67.

In the bond market, prices tumbled and short-term interest rates rose.

In the secondary market for Treasury securities, prices of short-term governments were off by 1/8 point, intermediate maturities dropped by point to 5/8 point and long-term issues were down by between 7/8 point and 1 5/8 points.

Yields on three-month Treasury bills rose 5 basis points, or hundredths of a percentage point, to 5.79%. Six-month bill yields rose 7 basis points to 5.86%. One-year bills were up 7 basis points to 5.90%.