Interest-Rate Worries Slow Stocks; Dow Up 1
Interest-rate worries kept the stock market on the defensive Monday, although a few blue chips managed a modest rally.
Trading set its slowest pace in seven weeks on the New York Stock Exchange.
The Dow Jones average of 30 industrials, down 6.18 points last week, recovered 1.66 to 1,277.50. But many broader measures of market trends finished with clear-cut losses.
Volume on the Big Board came to 89.74 million shares, down from 93.68 million Friday and the lightest total since an 86.19-million-share day Jan. 7.
The market’s 1985 rally has run out of steam lately as interest rates have rebounded after a long decline.
Volcker to Testify
One evident reason for the reversal in the direction of rates has been that the Federal Reserve has stopped easing credit and is proceeding “a bit more cautiously,” as Paul A. Volcker, the Fed’s chairman, told a Senate committee last week.
Volcker is due to testify again today, this time before a subcommittee of the House of Representatives.
Another force pushing rates higher has been evidence that economic growth is proceeding at a stronger-than-expected clip. Some analysts believe this could spur borrowing in the weeks ahead, applying more upward pressure on rates.
Texas Instruments fell 8 1/8 to 109 5/8 after an analyst at Morgan Stanley & Co. sharply reduced his earnings estimates for the company for 1985 and 1986.
Eastman Kodak climbed 1 to 69 1/2. The company said it formed a new division to produce and market electronic components.
Among other blue chips that finished in the plus column, International Business Machines added 1 to 133 7/8, General Motors 1/2 to 77 7/8 and Exxon 7/8 to 47.
Precious Metals Tumble
Trading in Exxon included a block of almost 2.4 million shares handled in the over-the-counter market by Jefferies & Co.
Precious metals issues tumbled as the price of gold continued its recent slide, falling $12.30 an ounce to $282 on the Commodity Exchange in New York.
Homestake Mining lost 1 1/2 to 20 5/8, ASA Ltd. 2 to 45, Campbell Red Lake 1 to 15 5/8 and Dome Mines 5/8 to 7 1/8.
The overall tally on the Big Board showed more than two losers for every issue that gained ground. The exchange’s composite index dropped 0.19 to 103.82.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 114.35 million shares.
Standard & Poor’s index of 400 industrials slipped 0.06 to 200.27, and S&P;’s 500-stock composite index was off 0.13 at 179.23.
The NASDAQ composite index for the over-the-counter market fell 2.23 to 283.95.
At the American Stock Exchange, the market-value index closed at 224.37, down 1.73.
The Wilshire index of 5,000 equities closed at 1,851.977, down 4.026.
Bond Prices Mixed
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,787, compared to 1,865 on Friday. Bond prices were narrowly mixed.
In the secondary market for Treasury bonds, prices of short-term governments slipped 1/32 point, intermediate maturities rose 2/32 point and long-term issues were down 2/32 point, according to the investment firm of Salomon Bros. Inc.
The movement of a full 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 little changed in light trading.
Among tax-exempt municipal bonds, general obligations fell 3/8 point and revenue bonds were little changed. Trading was light to moderate.
Yields on 30-year Treasury bonds inched up to 11.72% from 11.71% late Friday.
The federal funds rate, the interest on overnight loans between banks, traded at 8.375%, up from 8.25% late Friday.
