Dow Slides 19.90 as Investors Stick to Sidelines : Market Overview

* Wall Street stocks limped to a third consecutive loss, with investors deciding that an unexpected increase in February payrolls would prevent the Federal Reserve from lowering interest rates further. The Dow Jones industrial average fell 19.90 points to 3,221.60.

* Waves of profit taking drove Mexican stocks down sharply in the biggest one-day drop in six months.

* Bond prices rose slightly in heavy trading dominated by release of the February employment report.

* The dollar fell against most major currencies in a volatile session marked by intervention by two central banks and disagreement over the unemployment report.

Stocks

Dealers said a spate of sell programs fueled the decline in afternoon trading, made more volatile by a lack of liquidity as investors remained sidelined ahead of the weekend.

Advancing stocks led losses 1,084 to 610 on volume of 185 million shares on the New York Stock Exchange. The Dow ended down 46.07 for the week. Trading was lighter than in the previous two sessions, when volume topped more than 200 million shares. Weekly volume was 990.3 million.

Dealers said they expect business to be quieter Monday ahead of the “Super Tuesday” set of Southern presidential primaries.

In Mexico City, the exchange’s Bolsa stock index plunged 68.25 points, or 3.7%, to 1,792.85. For the week, the index lost 67.78 points.

The Mexican market began to weaken at midweek, after the Mexican government said it may issue more stock in Telefonos de Mexico, the national phone monopoly.

TelMex, which trades on the New York Stock Exchange and NASDAQ market as well as in Mexico City, fell 2 1/8 on the NYSE on Wednesday, 3/8 on Thursday and 1 on Friday, to finish at 54 7/8.

Another negative influence on stocks: On Friday, a well-known Mexican financier backed out of his offer to purchase one of the banks the government is attempting to sell in its massive privatization program. The news caused some investors to worry that the privatization program could falter.

Among the U.S. market highlights:

* Freddie Mac rose 7 1/4 to finish at 120 in late trading after the mortgage agency announced a three-for-one split, a boost in its quarterly dividend and a new preferred stock offering.

* Vitro Sociedad slid 4 1/4 to end at 26 1/2 after the Mexican glass maker reported disappointing 1991 earnings, traders said.

* United Airlines parent UAL Corp. dropped 2 3/4 to close at 149 5/8. Goldman Sachs analyst Glenn Engel cut his 1992 and first-quarter estimates for the company because of what he said was a deteriorating business mix in Asia.

* Centocor, a biotech issue, lost 1 1/2 to finish at 35. Alex. Brown & Sons rated the stock unattractive, traders said. Immune Response fell 1 3/4 to end at 26 3/4 after a Wall Street Journal article said the firm’s trials for an HIV vaccine were delayed. A spokesman said the company’s trials were “on track.”

* The Limited eased 3/4 to close at 27 1/8. McDonald & Co. analyst Jeffrey Stein repeated a cautious stance on the retailer.

Overseas, London stocks fell, with the Financial Times 100 index off 5.2 points at 2,533.1. Last Friday, it ended at 2,562.1. In Frankfurt, the 30-share DAX index dropped 18.85 points, or 1.07%, to close at 1,745.95. It was still just above its close of 1,745.13 a week earlier.

In Tokyo, the 225-share Nikkei average was up 128.57 points, or 0.62%, to 20,992.99. The Nikkei showed a net loss of 345.82 points for the week.

Credit

The price of the Treasury’s closely watched 30-year bond rose 3/8 point, or $3.75 per $1,000 in face amount, at closing. Its yield, which falls when prices rise, was 7.93%, down from 7.96% late Thursday.

Traders at first focused on the increase in non-farm payrolls and sold bonds.

“Our worst fears had been realized--the economy is rebounding here,” said Kevin Logan, chief economist for Swiss Bank Corp.

Yields on three-month Treasury bills fell to 4.12% as the discount fell 3 basis points to 4.03%. Yields on six-month bills fell to 4.27% as the discount fell 4 basis points to 4.13%. Yields on one-year bills sold at Thursday’s auction rose to 4.59% as the discount rose 2 basis points to 4.39%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, fell to 3.75% from 4% late Thursday.

Currency

The dollar rallied half a pfennig against the German mark right after news of the sharp rise in payrolls. The Swiss National Bank later swept the market with heavy sales of dollars and marks to defend the Swiss franc.

The dollar ended at 1.6675 marks, down from a Thursday close of 1.6720 marks. It was unchanged against the Japanese currency at 131.85 yen.

The dollar slipped to 1.5135 Swiss francs from 1.5255 francs Thursday. But it rose against the Canadian dollar, ending at 1.1915 Canadian dollars after a previous 1.1865, despite the Canadian central bank’s intervention.

The British pound edged higher to $1.7190 from $1.7175 Thursday, while the dollar slipped to 5.6645 French francs from 5.6800 francs.

Commodities

Lumber prices jumped after the Commerce Department found that Canada was unfairly subsidizing its lumber industry, but most contracts then retreated by the close of trading Friday.

Canadian forestry interests said they would fight what they saw as an unfair U.S. decision to extend a duty on lumber exports to the United States.

The Canadians said the trade dispute stemmed from a “political decision” on the part of the Commerce Department.

March lumber traded at the Chicago Mercantile Exchange soared $5 to $245.40 per thousand board feet, and closed $3.20 higher at $243.60. But May closed 50 cents lower at $244.90 and July dropped $1.50 to $244.90 per thousand board feet.

On the Comex in New York, gold bullion for current delivery closed at $349.50 an ounce, $1.90 lower than Thursday’s settlement price. Republic National Bank quoted a bid of $349.25 for an ounce of gold as of 4 p.m. EDT, down $2.20 from Thursday’s late bid.

At the New York Mercantile Exchange, light, sweet crude oil declined 4 cents to $18.51 a barrel.