Dow Drops 9 as Market Fails to Top 1,300 Level

The stock market suffered a setback today, faltering again near the 1,300 level in the Dow Jones industrial average.

The Dow Jones average of 30 industrials dropped 9.83 to 1,289.53.

Declines outpaced advances by about five to three on the New York Stock Exchange.

Big Board volume totaled 102.08 million shares, against 139.87 million in the previous session.

The NYSE’s composite index fell 0.61 to 105.43.

At the American Stock Exchange, the market-value index was down 0.23 at 228.25.

Analysts said investors’ confidence about the economic outlook seemed to remain strong.

A monthly survey of purchasing executives found a “healthy increase” in new orders last month, along with small increases in production and employment.

The respondents to the survey also reported widespread evidence that inflationary pressures remained subdued.

But some traders evidently continued to regard the Dow-1,300 level as a cue to sell.

Bond prices drifted in a narrow range in early trading as the government reported single-family housing sales were up in January for the second consecutive month.

Sales of new single-family homes rose 2.6% in January as falling interest rates continued to spur purchases, the government said.

In December, sales had climbed 1.3% following an 8.6% drop in November, according to the joint report by the Commerce Department and the Department of Housing and Urban Development.

Interest on fixed-rate conventional mortgages averaged 13.67% in early January, down from 1984’s high of 15.23% in July, according to a survey by the Federal Home Loan Bank Board.

In the secondary market for Treasury bonds, prices of short-term governments were unchanged from late Friday, intermediate maturities fell 2/32 point and long-term issues were down 3/32 point, 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 in light trading, Salomon Bros. said. Among tax-exempt municipal bonds, the firm said general obligations and revenue bonds were also unchanged.

Yields on three-month Treasury bills were down 3 basis points to 8.64%.