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There was snap in the air but little in stocks

There was an autumn nip in the air. Labor Day came and went, and yet it seems that most investors were spending a few extra days closing up the summer home and digging their cardigans out of storage.

Slow trading early on gave Wall Streeters time to unpack their own wool pin stripes.

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So toward week's end, everyone appeared dressed for a rally. They got a spurt Thursday but the Dow Jones industrial average closed Friday at 1207.38, down 17. 00 points in four sessions.

What triggered the spurt?

''Nothing,'' said Monte Gordon with a chuckle. The director of research at the Dreyfus Corporation, the big mutual fund manager, says: ''This is the beginning of the new year for the investment community. It was in keeping with historical expectations that you have a post-Labor Day rally.''

Well, something happened. At least on the bond market something happened. Stocks tagged along as bond prices surged on speculation that the Federal Reserve might be loosening credit. For a couple of days the Fed vigorously pumped reserves into the banking system.

Some analysts figure the Fed is trying to bring down the federal funds rate (the rate banks charge one another for overnight reserve loans), which would ease the prime rate. Recently the federal funds rate has pushed toward 12 percent, up from 11.5 percent two weeks ago. Others say the Fed is merely doing some technical tinkering and it's too early to loosen the reins on credit.

The concern is that easier credit would boost an economy that many consider is growing too quickly and might reignite inflation.

As if to douse such concern, the Fed reported, for the week ending Aug. 27, that the M-1 (the measure of money in cash and checking accounts held by the public) dropped an unexpected $700 million. The drop keeps M-1 well within the the Fed's 5- to 8-percent growth target.

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But, says Mr. Gordon at Dreyfus: ''The economy is still growing at a 4.5 to 6 percent anuual rate. It's not 7.6 or 10.1, but it's still a very high rate. Historically, 2.5 to 3 percent is considered average.''

There's still is a wild card to be dealt, though. Market analysts are mulling over the effect of a possible strike at General Motors. The current contract lapses at midnight, Detroit time, Sept. 14.

''A strike would slow the rate of growth and might cause interest rates to drop - temporarily,'' Gordon notes. Even with a strike, he is recommending auto stocks, because ''the demand is there.'' Dealers are clamoring for cars, since manufacturers have slowed production to retool for next year's models.

Impending strike or no, brisk Canadian air has many investors in the East pondering the fall and, yes, winter months ahead. But when a number of investment advisers were asked for good stocks for the next three to six months, they tended to hedge.

''If you were going to get into toy stocks, you would have done it earlier,'' says Gordon. He cites retail and defense issues as being strong but feels the market as a whole is uncertain, floating around between 1,180 and 1,250 or 1,275 .

With similar uncertainty, William Raftery, a technical analyst at Smith Barney, Harris Upham, comments: ''The market lacks strong leadership in capital goods. It's in for a pause. We need more than the consumer disinflation stocks coming to the fore. We just underweighted the oil group, which account for 20 percent of the index - it acts as quite a drag.''

To find optimism, it seems, one has to go to more temperate climes, like Los Angeles. At Intercapital Group, a subsidiary of Bateman Eichler, Hill Richards, president Werner Keller says the next rally is ''no more than two or three weeks away.'' This bullish cheerleader of Reaganomics expects moves of 100 to 150 points ''routinely'' in the coming months and recommends investing in securities brokerage stocks.

Interest rates Percent Prime rate 13.00 Discount rate 9.00 Federal funds 11.50 3-Mo. Treasury bills 10.98 6-Mo. Treasury bills 11.41 7-Yr. Treasury notes 12.80 30-Yr. Treasury bonds 12.45 Source: Bank of Boston

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