The stock market posted a broad loss Monday in the quietest trading since the first session of 1985.
Takeover developments and corporate earnings news produced wide swings in several individual issues in an otherwise low-key day on Wall Street.
The Dow Jones average of 30 industrials, up 20.10 points last week, dropped back 7.51 to 1,259.94.
Volume on the New York Stock Exchange slowed to 74.04 million shares, down from 99.25 million Friday and the lightest total since 67.82 million were traded on Jan. 2.
Analysts noted that investors were faced with many uncertainties involving the outlook for interest rates.
Fed Panel to Meet
The Federal Reserve's policy-setting Open Market Committee is scheduled to meet today to discuss how credit conditions should be managed in the weeks ahead.
The committee, as usual, is faced with a difficult balancing act as it considers such factors as the recent volatility of the dollar in foreign exchange and evidence of slower-than-expected growth in the economy for the first quarter of 1985.
Traders also will be watching the response of the credit markets to the government's sale this week of $16.25 billion in notes and bonds.
Another problem for the market was International Business Machines' announcement late Friday that it would report lower earnings for the first quarter.
IBM shares, which fell 1 point on Friday, slumped another 3 to 124 1/2.
McGraw-Edison jumped 8 to 63 1/2 on word that Cooper Industries plans a $65-a-share takeover bid for the company. The stock had risen 11 points Friday as the investment firm of Forstmann Little & Co. agreed on a buy-out plan at $59 a share.
On the downside, G. D. Searle tumbled 8 to 48 3/4. The company, which had been studying various possible ways to sell its businesses, said it had decided to continue operating in its present independent form.
Auto Issues Gain
Securities-industry stocks were mostly lower as trading volume contracted in the stock market. Merrill Lynch dropped 1 to 29 5/8, E. F. Hutton 1 to 35 1/2 and Paine Webber 1 to 37 1/8.
Auto issues gained ground with some of the companies posting strong domestic car sales figures for mid-March. Ford Motor rose 1/8 to 42 3/4, General Motors 3/4 to 74 1/2 and Chrysler to 34 3/8
In the daily tally on the Big Board, nearly two issues fell in price for every one that gained ground. The exchange's composite index lost 0.60 to 103.05.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 92.54 million shares.
Standard & Poor's index of 400 industrials dropped 1.13 to 198.60, and S&P;'s 500-stock composite index was down 1.07 at 177.97.
The NASDAQ composite index for the over-the-counter market fell 2.65 to 276.26. At the American Stock Exchange, the market-value index closed at 224.04, down 0.95.
The Wilshire index of 5,000 equities closed at 1,832.712, down 11.57 or 0.63% from Friday.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,342, compared to 2,000 on Friday.
Bond prices rose Monday as short-term interest rates fell.
The Treasury Department, meanwhile, said yields also fell on new government bills sold at its weekly auction.
The Treasury said it sold $7 billion in three-month bills at an annual average discount rate of 8.41%, down from 8.64% last week. The latest rate was the lowest since 8.36% on Feb. 25.
Another $7 billion in six-month bills were sold at an average rate of 8.86%, down from 9.04% last week and the lowest since 8.79% on March 11.
In the secondary market, yields on three-month Treasury bills fell 12 basis points to 8.38%. A basis point is one-hundredth of a percentage point. Six-month bills lost 7 basis points to 8.84%, and one-year bills were off 5 basis points at 9.01%.
Yields on 30-year Treasury bonds fell to 11.76% from 11.83% late Friday.
The federal funds rate, the interest on overnight loans between banks, traded at 8%, down from 8.375% late Friday.
In the secondary market for Treasury bonds on Monday, prices of short-term governments rose 3/32 point, intermediate maturities rose 8/32 point and long-term issues were up 18/32 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 rose 3/8 point in light trading, while general obligations and revenue bonds edged up 1/8 point in light trading.