FINANCIAL MARKETS : Market Marks Time as It Holds Finger to Wind : Market Overview

Stocks fell back from a morning rally, ending only modestly higher as cautious investors resisted any big moves into the market ahead of much-awaited data on inflation.

* Treasury bond yields fell moderately on hints that upcoming economic data will show inflation to be flat or barely rising.

* The dollar rose after leading financier George Soros attacked the German mark and gave traders the excuse they sought to buy dollars.

Stocks

Stocks spent most of the day firmly in positive territory before tumbling late in the session, then recovering slightly.

“It’s a market without leadership or direction,” said James Melcher, founder and president of Balestra Capital.

The Dow Jones industrial average rose 1.39 points to 3,511.93. Advancing issues outnumbered declines by about 7 to 6 on the New York Stock Exchange. Volume on the floor of the Big Board came to 242.39 million shares, up from 238.09 million in the previous session.

Analysts said investors were cautious ahead of Friday’s data on producer prices and Tuesday’s report on consumer prices. Investors worry that if the economic data shows strength, the Federal Reserve might tighten credit.

The NASDAQ composite index rose 1.50 points to 689.24. The NYSE composite index rose 0.62 to 245.77, while the American Stock Exchange market value index dropped 0.82 to 436.36.

Among the market highlights:

* In actively traded NYSE issues, Student Loan Marketing Assn. rose 1 to 47 1/4 after news that a compromise bill nearing a vote in a Senate committee would shift half of student loans to a system of direct federal lending.

* Sprint rose 7/8 to 30 3/4 after it was reported that the company and Visa U.S.A. plan to cut their calling card rates.

* Many stocks that fared poorly in recent days bounced back Wednesday. Casino stocks, which tumbled Tuesday after being cited in a newspaper article as among the most expensive shares, rose. Caesar’s World jumped 1 1/8 to 46 5/8 and Promus gained 2 3/4 to 42.

* Financial stocks also rose after fears that higher interest rates would eat into bank profits had depressed the issues. JP Morgan rose 5/8 to 64 7/8, Morgan Stanley rose 5/8 to 64 1/4 and Wells Fargo jumped 2 1/8 to 98 3/4.

* Many technology stocks continued their downward drift. Compaq Computer fell 4 3/8 to 53 3/4 after downgrades from analysts and a report in the Wall Street Journal of heavy insider selling of the stock. In NASDAQ trading, Apple Computer lost 5 1/4 to 44 1/4 after saying earnings this year will probably be even worse than downbeat market projections. Adobe Systems rose 4 1/8 to 68 3/4 after positive comments from analysts.

Stocks abroad ended higher. London’s Financial Times 100-share index finished 22.5 points higher at 2,866.9. Frankfurt’s DAX 30 index closed up 11.46 points at 1,673.07. The financial markets were closed in Japan for a national holiday.

Credit

The yield on the Treasury’s main 30-year bond fell to 6.88% from 6.91% on Tuesday. Its price, which moves in the opposite direction from yield, was up 7/16 point, or $4.38 per $1,000 in face value.

Economist Marshall B. Front, president of Chicago-based investment firm Stein Roe & Farnham Inc., said traders were training their sights on Friday’s producer price report and Monday’s business inventories report.

Traders are not expecting negative numbers, which would indicate a rise in inflation, Front said. Inflation tends to erode the value of fixed-income investments such as Treasury securities.

Other Markets

Billionaire philanthropist and speculator Soros said in a British newspaper article that Germany’s Bundesbank has kept interest rates too high for too long and that he expects rates to fall and the German mark to depreciate.

“For the sake of full disclosure,” Soros, 62, said in a Times of London article, “I am talking my book.”

Dealers said Soros’ view is no different from that of many other market pundits, but his thoughts were aired at a time when the market was looking for a reason to buy dollars.

Interest in the yen was muted, with Tokyo markets closed for the royal wedding, and the dollar closed at 106.40 yen in New York, unchanged from late Tuesday.

The dollar finished at 1.6370 marks, up from 1.6265 at Tuesday’s close. The British pound settled at $1.5155 in New York, down from $1.5190 on Tuesday.

Gold and silver prices sank in anticipation of upcoming data that is expected to show a tempering of inflation last month. Gold prices fell $2.60 on New York’s Commodity Exchange, where bullion for the most active August contract settled at $373 an ounce.

Market Roundup, D6