Business

As the stock market gyrated in recent weeks, the swings have been fueled by the widespread use of program trading. In this computerized practice, speculators trade stocks and stock-index futures simultaneously to profit from minute differences in prices. But program trading incited a Wall Street revolt last week as the Dow Jones industrial average plunged 92.42 points to 2596.72. Faced with pressure from investors, the firms Bear, Stearns and Morgan Stanley said they will halt the use of index arbitrage, the most popular form of the | strategy. A third firm, PaineWebber, scrapped all forms of program trading.

The moves came after two institutional investors, Keystone Group and Kemper Financial Services, said they will stop doing business with brokerages that use index arbitrage. At week's end the New York Stock Exchange said it will consider ways to tighten the rules governing program trading. Said Richard Grasso, the exchange president: "As a marketplace that has almost 47 million individual investors, we have got to be concerned about anything that might be harmful to those constituents."