FINANCIAL MARKETS : Blue Chips Fall on Mixed Economy News; Rates Hold

The blue-chip stocks fell back below the 4,000 mark again Wednesday as investors mulled mixed signals on the economy’s strength.

The Dow Jones industrial average closed with a loss of 16.25 points at 3,994.80. In the broader market, declining issues led advances by about 5 to 4 on the New York Stock Exchange where volume was moderately heavy at 362.56 million shares up from 317.61 million Tuesday.

Wall Street appeared caught in a debate whether to take profits now or to extend the rally after the Dow index soared last week through the 4,000 barrier for the first time ever.

Analysts say market psychology is typically indecisive at major milestones such as the 4,000 level.

They note that through Tuesday of this week the Dow has risen more than 9% since dropping to the 3,675 level the day before Thanksgiving in November of last year, and some profit-taking was due.

Broad market indexes also were lower. The NYSE’s composite index fell 0.89 point to 263.76. The Standard & Poor’s 500-stock index lost 1.74 points to 485.65.

The Nasdaq composite index declined 1.86 points to 791.87. At the American Stock Exchange, the market value index slid 1.97 points to 450.74.

Stocks have been boosted by recent data showing the economy slowing, which convinced investors that the Federal Reserve Board may hold off on more increases in interest rates. But the market got mixed signals from the latest batch of data released Wednesday.

The Commerce Department revised upward the annualized rate of expansion in gross domestic product in last year’s fourth quarter to 4.6% from 4.5% estimated a month ago. In addition, the size of fourth quarter business inventories were revised sharply downward, suggesting that consumer demand is still healthy.

In another closely watched report, the National Assn. of Purchasing Management said its overall index of manufacturing activity dropped to 54.5% in February from 57.9% in January.

“Stocks are generally sporting a positive bias but . . . it’s going to be difficult for the market to move much higher,” said Bob Walberg, market analyst at MMS International.

Among Wednesday’s highlights:

* Stocks in companies whose earnings could be vulnerable to an economic slowdown, including auto makers, were hard hit. Chrysler lost 2 to 41 3/8, General Motors was off 2 1/8 to 40 1/2 and Ford Motor fell 1/2 to 25 5/8.

* Alcoa, hit by a downgrade from Goldman Sachs, lost 1 to 38 and Caterpillar, which was downgraded by Smith Barney, fell 1 3/8 to 50 1/4.

* America Online shot up 11 1/4 to 82 1/4 after German media group Bertelsmann AG said it would take a 5% stake in the firm and had an option to raise its stake to 10%. Bertelsmann said the two companies were setting up a 50-50 venture to provide on-line computer services in Europe.

* Texas Instruments said it expects the worldwide semiconductor market will grow by about 21% in 1995. Its stock gained 2 1/4 to 81. Micron Technology, another chip maker, gained 2 7/8 to 64 7/8. Intel fell 1 to 78 3/4.

* Amgen fell 1 to 68 after it won a license to develop products based on an obesity gene.

* Atmel rose 1 1/4 to 35 3/8. The company introduced the first battery-operated flash memory.

The New York-traded issues of Mexican companies finished mixed as the Mexican Bolsa fell 31.88 points to 1,517.96, following the arrest of the brother of former President Carlos Salinas de Gortari in connection with the slaying of a former ruling party official.

* Telefonos de Mexico fell 1/4 to 26 3/4; Grupo Televisa fell 1 to 15 1/2; Grupo Tribasa rose 1/8 to 6; Grupo Financiero Serfin rose 5/8 to 3 5/8; Bufete Industrial rose 7/8 to 6 5/8.

Elsewhere overseas, Tokyo traders said selling linked to arbitrage unwinding in futures pummeled the Nikkei 225-share share average which closed down 434.72 points at 16,618.71.

London’s FT 100 closed up 31.9 points at 3,041.2, while Frankfurt’s DAX 30-share average gained 23.97 points to end at 2,126.15.