Stock indexes join pork bellies in the commodity pits

The stock market has become a ''commodity.''

Investors can now bet on whether the market will go up or down the same way they can with soybeans, corn, pork bellies, and gold.

This latest wrinkle in the commodity markets has come about because the Kansas City Board of Trade, which is mainly known as a commodity pit trading in wheat futures, has begun trading in stock index futures, using the Value Line composite index of 1,700 stocks.

Market observers described the initial trading, last Wednesday, as ''robust.''

To some investment advisers, it's the best thing to happen to the stock market since options. ''This is a historic day,'' said Martin Zweig, who writes a newsletter, concerning the first day of trading. But to others, including one former Securities and Exchange commissioner, it was a dark day, since unsophisticated people are sure to lose their money in the new commodity pit.

At least two congressmen intend to hold hearings about the new indexes, and some critics have called the new commodity contracts ''legalized gambling,'' since no goods or securities will change hands as with other commodity contracts. Instead, all contracts will be settled in cash. Futures contracts represent an agreement to buy or sell a specified commodity at a specified price at a specific future date.

In fact, experts expect some states to challenge the new contracts under their state gambling laws.

Despite the expected challenges, more stock index futures will soon be popping up on various exchanges. The Chicago Board of Trade, the largest commodity exchange, has submitted applications to trade 10 indexes of its own, representing various industry groups such as utilities. The New York Futures Exchange would like to trade all Big Board indexes, and the New York Commodities Exchange and Chicago Mercantile Exchange have applied to trade the Standard & Poor's 500.

It's expected that the Commodities Futures Trading Commission will approve more trading in the next 60 to 90 days. Although each exchange contract will differ, they will all be highly leveraged, with the speculator only putting up 10 percent of the value of the contract. For example, on a Kansas City contract the initial margin requirement was $6,400 last week, because the value of the stocks in the Value Line Index stood at about $64,000. Some people hope the $6, 400 fee is large enough to keep out many of the unsophisticated.

The most enthusiastic proponents of the futures contracts are those who see them as a way for institutions or individuals to limit their risks. For example, if someone has a portfolio of stocks that resemble those in the Value Line Index and the value of the portfolio is $60,000 or 65,000, he could use the index to hedge his position. Thus, if he thought the market was due for a period of weakness, he could sell a futures contract on the Kansas City Board of Trade. If the market fell as expected, the value of the portfolio would fall, but the futures position would earn a profit, making up for the loss in portfolio value.

Or, as Frederick Grauer, a vice-president at Merrill Lynch, Pierce, Fenner & Smith in San Francisco, notes, an institution can use it to limit ''industry risk.'' Thus, if a portfolio manager follows United Airlines and has a large position in it, he can limit his industry risk by writing a contract on an airline average. If the airline industry goes down, but United doesn't go down as much, he has limited his risk and enhanced his income.

Mr. Grauer, who was formerly director of the center for commodities futures research at Columbia University, believes the futures contracts could also tend to stabilize the stock market itself. Rather than dump stocks when they expected it to go down, portfolio managers could write contracts on their positions. In other markets, such as cattle and lumber, he says, studies have shown that futures markets tended to stabilize prices.

Michael Clowes, editor of Pension and Investment Age, says most institutions will probably sit out the initial phases of the contract to see how it works. ''It takes a pension fund about three years to get going on something like this, '' he says, noting that pensions have been slow to invest in real estate and overseas stock markets. ''Eventually they will use it,'' he concludes.

Seth Lynn, a vice-president at Bankers Trust Company in New York, says he foresees using it to help him run the $3.5 billion the bank has in its ''index fund.'' The index fund, which is designed to track an index such as the Standard & Poor's 500, could use it, for example, when it received a new large lump sum of funds. ''What if we get $100 million in new funds,'' he explains. ''You can't go from cash to stocks in a day or even two or three days. It typically takes about two weeks. So how do you avoid the risk of not being in the market, especially if it takes off like a shot? You might want to buy contracts and then unwind them as you invest.''

Although the bank hasn't asked any of its clients for permission to deal in the markets, he anticipates that it will.

Encouraged by lower inflation and declining interest rates, stock prices gained lost ground in the middle of the week. The Dow Jones industrial average closed Friday at 824.39 points, up .09 for the week.