Stocks Edge Down as Traders Take Profits

The stock market posted small but fairly broad losses Monday in selling attributed to profit takers after last week’s gains.

Utility and financial issues were weak as interest rates rose in the credit markets.

The Dow Jones average of 30 industrial stocks, up 20.94 points last week to a record high, slipped back 1.90 to 1,357.64. The average fell about 8 points by mid-session and then staged a gradual recovery until the close.

Volume on the New York Stock Exchange hit a two-week low of 93.54 million shares, against 114.83 million Friday.

Analysts said the market had been showing impressive strength lately, with all but a few of the major indicators at or near new peaks.

However, they also said it appeared that stock prices at their current levels had taken a lot of potential future favorable news into account. In this situation, they said, a good many traders were eager to cash in some profits.

Stocks also got no help Monday from interest rates. In the credit markets, rates on short-term Treasury bills rose 7 to 15 basis points, or hundredths of a percentage point.

Prices of long-term government bonds, which move in the opposite direction from interest rates, showed losses of from $5 to $10 for every $1,000 in face value.

That news weighed down many stocks that benefited recently when interest rates were coming down steadily. Among financial issues, H. F. Ahmanson dropped 1 to 30 5/8 despite the company’s report of sharply higher second-quarter profits, Great Western Financial lost 3/8 to 27 7/8 and Federal National Mortgage 3/4 to 19 1/2.

In the utility sector, Pacific Telesis fell 1 3/4 to 77 5/8, Ameritech 1 1/8 to 91, Southwestern Bell 1 1/8 to 83 7/8 and Nynex 3/4 to 87.

G. D. Searle was actively traded, up 1/8 at 64, while Monsanto rose 3/8 to 53 after trading as low as 51 3/4. Last week, the two companies agreed to a $65-a-share takeover of Searle by Monsanto.

On Monday, Monsanto reported that its earnings for the second quarter were $1.60 a share, down from $1.77 in the comparable period last year.

Cray Research jumped 5 to 95 3/4. The company posted second-quarter profits of 90 cents a share, compared to 27 cents in the year-ago period.

Elsewhere in the computer and technology sector, Texas Instruments gained 4 3/8 to 104 3/4, Digital Equipment 2 to 102 3/4, Hewlett-Packard 3/4 to 37 7/8 and Burroughs 7/8 to 62 3/8.

In the bond markets, prices fell broadly as a key short-term interest rate edged higher and expectations grew that interest rates may have bottomed out for the time being.

The federal funds rate, the interest on overnight loans between banks, traded at 8%, up from 7.75% late Friday.

In the secondary market for Treasury bonds on Monday, prices of short-term governments fell point, intermediate maturities fell by between 1/2 point and 7/8 point and long-term issues were down 3/4 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials fell 5/8 point and utilities fell 1/2 point in light trading.

Yields on three-month Treasury bills rose 11 basis points to 7.22%. Six-month bills rose 3 basis points to 7.30%, and one-year bills were up 7 basis points at 7.44%.