Stocks Post Another Decline; Dow Drops 3
Stock prices declined again Friday, closing out a sluggish week marked by concern over the recent upswing in interest rates.
The Dow Jones average of 30 industrials, up about 2 points shortly before noon, closed with a 3.20 loss at 1,275.84. For the holiday-shortened week, the average showed a 6.18-point loss.
Friday’s volume on the New York Stock Exchange came to 93.68 million shares, down from 104.02 million Thursday.
Open-market interest rates have been rising since Paul A. Volcker, chairman of the Federal Reserve Board, reported earlier this week that the Fed was no longer easing credit conditions.
Volcker said that did not mean that the central bank had shifted to tightening credit. But speculation spread on Wall Street that the Fed’s policy might well move in that direction.
Word from the Fed late Thursday of a $2.2-billion rise in the money supply for the latest reporting week added to those worries, as did the news that the government had raised its figure for economic growth for the fourth quarter of last year to 4.9% from an earlier estimate of 3.9%.
Bond Prices Drop
The stronger the economy, many analysts reason, the more wary the Fed is likely to become about a possible revival of inflationary pressures.
In the credit markets Friday, prices of long-term government bonds, which move in the opposite direction from interest rates, dropped $5 to $10 for every $1,000 in face value.
Mobil led the active list, up 1 7/8 at 29 on turnover of nearly 2.6 million shares. The company said it had retained Goldman, Sachs & Co. to study the possibility of spinning off some of its operations.
Rising interest rates prompted selling of savings and loan issues. Home Federal Savings & Loan fell 1 at 20 1/8, Financial Corp. of America 1/2 to 9 3/8 and Great American First Savings Bank 3/4 at 14.
Precious metals stocks also were weak as the price of gold fell $4.40 to $294.30 on the Commodity Exchange in New York. ASA Ltd. dropped 1 1/8 to 47 1/2, Homestake Mining 1/2 to 22 1/8 and Campbell Red Lake 5/8 to 16 5/8.
Holiday Inns climbed 1 1/8 to 52 5/8. The company disclosed plans to buy back as many as 3.7 million of its shares.
In the daily tally on the Big Board, about five issues declined in price for every three that rose. The exchange’s composite index lost 0.50 to 104.01.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 111.37 million shares.
Standard & Poor’s index of 400 industrials fell 0.80 to 200.33, and S&P;’s 500-stock composite index was down 0.83 at 179.36.
The NASDAQ composite index for the over-the-counter market dropped 0.81 to 286.18.
At the American Stock Exchange, the market-value index closed at 226.10, off 2.07.
The Wilshire index of 5,000 equities closed at 1,856.003, down 8.736.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,865, compared to 1,945 on Thursday.
Bond prices continued their weeklong slide.
For the week, yields on 30-year Treasury bonds rose to 11.71% from 11.34% a week earlier. The yield was 11.58% late Thursday.
The federal funds rate traded late Friday at 8.25%, down from 8.688% late Thursday.
In the secondary market for Treasury bonds, prices of short-term governments fell point, intermediate maturities were off between point and 3/4 point and long-term issues were down as much as a full point, according to the investment firm of Salomon Bros. Inc.
In corporate trading, industrials and utilities were down 3/4 point in moderate trading.
Among tax-exempt municipal bonds, general obligations were off 1/2 point and revenue bonds were down 5/8 point.
Yields on three-month Treasury bills fell 1 basis point to 8.39%. Six-month bills rose 1 basis point to 8.51%, and one-year bills were up 2 basis points to 8.67%. A basis point is one-hundredth of a percentage point.
