Stock Prices Tumble; Dow Declines 11 Points
The stock market retreated broadly today in what analysts attributed to a bout of profit-taking in the wake a five-week price rally.
The Dow Jones average of 30 industrials, which had risen 12.25 last week despite a 0.11 decline on Friday, fell 11.81 to 1,278.16.
Big Board volume totaled 104.00 million shares, against 116.46 million in the previous session.
Declining issues outpaced gainers by about five to three on the New York Stock Exchange, whose composite index fell 0.89 to 104.50.
At the American Stock Exchange, the market-value index was down 1.52 to 229.53.
IBM, GM Lead Decline
Blue-chip issues such as IBM and General Motors led the decline in moderately active trading.
Eastman Kodak was down 3 at 70 despite reporting a sharp improvement in its fourth-quarter profit. The company said in announcing the results that similar big gains will be more difficult to achieve in 1985.
Stock prices have been moving steadily higher in early 1985 with the broadly-based measures of market performance generally making greater strides than the blue-chips. Some analysts say that bodes well for the long-term outlook for stock prices.
But others say a pullback in prices was inevitable as traders cash in on the early 1985 advance.
“Traders are taking profits and there are some very big profits to be taken this year,” said Newton Zinder, who follows the market for E.F. Hutton & Co. He called the day’s performance one of the “periodic pauses and pullbacks” that are to be expected.
An hour before the close, Phillips Petroleum, which is resisting its second takeover offer in less than three months, was down 5/8 at 49 1/2.
Bond prices were unchanged to slightly higher in light, early trading today as investors awaited clues on the course of Federal Reserve Board policy. Short-term interest rates drifted lower.
The Fed moved agressivly to push down interest rates in the second half of 1984 when the economy appeared sluggish. But analysts said that as a result of a resurgence in faster money supply growth, the Fed now may be less eager to stimulate the economy.
Revenue Bonds Rose
Fed policy makers are to meet Tuesday in Washington to review their strategy for 1985. The following week, Paul A. Volcker, the chairman of the central bank, will appear before Congress to discuss monetary policy.
In the secondary market for Treasury bonds, prices of all maturities ranged between unchanged and up 1/8 point in the early going today, according to the investment firm of Salomon Bros. Inc.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials and utilities were unchanged. Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds rose point.
Fed Funds Rate Dips
Yields on three-month Treasury bills fell 1 basis point from late Friday to 8.21%. A basis point is one-hundredth of a percentage point. Six-month bills fell 1 basis point to 8.28% and one-year bills were off 3 basis points at 8.44%.
The federal funds rate, the interest on overnight loans between banks, traded at 8.25% at midday, down from 8.313% late Friday.
