STOCKS : Dow Edges Up 4.25; Trading Pace Slows

Blue chip stocks ended slightly higher Wednesday, but the broader market was mixed in lethargic trading as investors started squaring their positions ahead of the Memorial Day weekend.

The Dow Jones industrial average rose 4.25 points to 2,910.33. Other indexes were stronger, with the NASDAQ composite of small stocks rising 3.69 points to 487.29.

But losers slightly outnumbered gainers in nationwide trading of New York Stock Exchange-listed stocks, with 798 down, 766 up and 507 unchanged.

Big Board volume fell to 159.31 million shares from Tuesday’s 186.86 million.

“We’ve got a market that’s pretty motionless,” said Gene Jay Seagle, director of technical research at Gruntal & Co. “Most of the bad news is out in terms of corporate earnings report surprises, so the market is looking for a positive catalyst,” he said.

Seagle said another cut in interest rates by the Federal Reserve would provide the needed spark. But there is no sign yet that the Fed is willing to accommodate investors.

In the meantime, investors are rooting through various stock groups for bargains, or for issues likely to do well even if the economy remain soft.

Among the market highlights:

* IBM rebounded 3 1/8 to 104 5/8 after trading as low as 100 1/2 Tuesday on an analyst’s negative comments. Several more analysts cut their earnings estimates for IBM Wednesday, but bargain hunters still moved in.

Tech stocks jumped across the board, following IBM. Microsoft leaped 4 3/4 to 106 3/4, Intel gained 1 1/2 to 48 1/2, Micropolis jumped 1 5/8 to 14 3/4, Conner Peripherals rose 1 5/8 to 20 3/4 and Computer Sciences added 1 7/8 to 66 7/8.

El Segundo-based International Rectifier, which makes power semiconductor products, soared 1 1/4 to 20 1/4 after Shearson Lehman initiated coverage of the stock.

* Some retail stocks continued their recent strength. Price Co. gained 3 1/8 to 55 1/8, Gap added 1 5/8 to 59 3/4 and Irvine-based Wet Seal rocketed 1 3/8 to 13 3/8.

Home Depot rose 1 7/8 to 62 5/8, setting a record high as the company declared a 3-for-2 stock split and an accompanying 50% increase in the cash dividend.

* Many industrial stocks weakened as investors turned increasingly pessimistic about a rise in capital-goods demand soon. Steelmaker Nucor fell 2 1/4 to 76 1/8 after Donaldson Lufkin & Jenrette cut earnings estimates. Caterpillar lost 1 1/4 to 46 7/8 after Smith Barney repeated an “avoid” rating.

* National Medical Enterprises dropped 7/8 to 46 as the market absorbed a secondary offering of 1.73 million of the Santa Monica hospital firm’s shares.

* Azusa-based Optical Radiation lost 1 1/4 to 24 3/4. The company ceased distributing a special eye lens because of a dispute with the Food and Drug Administration over whether the lens was “pre-approved” for marketing. The company said it will furnish the FDA with additional information to end the dispute.

* Lumber giant Potlatch fell 2 1/2 to 41 1/2 after rising 4 5/8 on Tuesday on takeover rumors.

* Time Warner slid 6 5/8 to 112 3/8. Influential media analyst Emanuel Gerard downgraded the stock to “sell” from “hold.”

In overseas trading, German stocks rose on buoyant buying from foreign and domestic investors. The DAX average soared 30.29 points to 1,647.69.

In London, sellers ruled the day, as the Financial Times 100-share average closed at 2,465.9, down 16.8 points.

In Tokyo, the 225-share Nikkei average slipped 82.55 points to close 25,398.66.

Meanwhile, Brazil’s market index hit an all-time high of 85,833, for the seventh straight gain. The market is up 22% over the past two weeks on optimism about the government’s new economic team.

Credit

The government bond market finished mixed, with short-term securities lifted by a strong auction of two-year notes.

The Treasury’s 30-year bond was down 1/4 point, or $2.50 per $1,000 in face amount. Its yield was 8.27%, up from 8.25% on Tuesday.

Douglas McAllister, analyst at Prudential Securities, said a lower-than-expected yield on the two-year Treasury notes--6.81%--illustrated strong demand. That bodes well for today’s auction of $9.25 billion in five-year notes.

The Fed funds rate, interest charged on overnight loans between banks, was quoted at 5.69%, unchanged from Tuesday.

Currency

The dollar rose on technical factors in extremely quiet trading.

Traders were adjusting positions ahead of today’s release of durable goods figures for April and weekly state unemployment claims data. The markets were hoping that the reports would give them clues about the direction of the economy and interest rates.

In New York, the dollar rose to 137.80 Japanese yen from Tuesday’s close of 137.30, and to 1.722 German marks from 1.712.

Commodities

Cotton futures prices skidded from 10-year highs as drier weather in the Mississippi Delta calmed fears about further planting delays.

Cotton futures fell the daily limit of 2 cents a pound across the board. The contract for delivery in July settled at 91.86 cents a pound.

On Tuesday, July cotton traded as high as 94.45 cents, the highest price for a near-term contract since September, 1980.

Elsewhere, light, sweet crude oil finished 28 cents lower, with July futures at $20.83 a barrel on the New York Mercantile Exchange.

On the New York Comex, gold was 70 cents to $1.10 lower, with June at $356.80 an ounce; silver fell 0.3 to 0.5 cent, with May at $4.03.

Market Roundup, D6