Market Posts Broad Losses; Dow Off 9.60 : Abrupt Downturn in Oil Issues Puts End to Weak Early Rally

An abrupt downturn in oil issues helped push the stock market broadly lower in sluggish trading Friday.

Auto stocks, notably General Motors, also paced the losers. Paper, computer and airline stocks lost ground as well.

The Dow Jones average of 30 industrials fell 9.60 to 1,275.18, erasing its 6.29-point gain Thursday and narrowing its net gain for the week to 8.62 points.

Losers overall led gainers four to three on the New York Stock Exchange, whose composite index fell 0.63 from a record high to 105.52.

Big Board volume slowed to 86.57 million shares from 108.63 million Thursday.

Prices were slightly ahead through morning trading but then steadily lost ground for the remainder of the session, finishing near their lowest levels of the day.

Earlier this week the market had pushed ahead despite some bearish developments, such as a rebound in interest rates and further reports of first-quarter declines in corporate earnings. But those developments continued to weigh on Wall Street, analysts said.

Concern Over Profits

There are concerns that the weakening economy will continue to erode corporate profits in the second quarter and that interest rates--as evidenced by their recent upturn--will continue to provide bonds and other fixed-income investments with more attractive yields relative to stocks. Interest rates were mixed in the money markets Friday.

In addition, the dollar again strengthened this week against other major currencies, thereby threatening to reduce the dollar value of overseas earnings of U.S. multinational companies.

Unocal again led the NYSE’s active list and fell 1/8 to 46. A federal judge ordered Unocal to postpone its annual meeting for at least two weeks, a delay sought by Texas oilman T. Boone Pickens Jr. in his attempt to acquire Unocal.

Other oil stocks slumped as well, reversing their sharp gains Thursday. Exxon lost 7/8 to 51 7/8, Mobil gave up 5/8 to 30 3/8, Texaco fell 1/2 to 39 3/8 and Atlantic Richfield was down 3/4 at 53.

Bond prices rose as interest rates fell.

On Thursday, the Federal Reserve Board reported that the nation’s basic money supply dipped $300 million in mid-April. Many analysts had expected a rise of as much as $1 billion.

An unexpected decline in the money supply would normally encourage speculation that the Fed could relax its credit policy, pushing interest rates lower.

But the initial reaction in the credit markets was the reverse, because a heavy slate of Treasury offerings are scheduled to be announced next week. Also, some analysts say congressional inaction on cutting the federal budget deficit is limiting the Fed’s options.

But, these interest rates did fall Friday:

- The federal funds rate, or the interest on overnight loans between banks, traded at 7.875%, down from 8.125% late Thursday.

- Yields on 30-year Treasury bonds were 11.42%, down from 11.44%.

- Yields on three-month Treasury bills fell 6 basis points to 7.79%. Six-month bills fell 9 basis points to 8%, and one-year bills fell 7 basis points to 8.25%. A basis point is one-hundredth of a percentage point.

In the secondary market for Treasury bonds, prices of short-term governments were up 5/32 point, intermediate maturities rose 6/32 point and long-term issues were up 11/32 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 point in light trading.

Among tax-exempt municipal bonds, revenue bonds were up point and general obligations were unchanged in moderate activity, Salomon Bros. said.