Stocks Take Biggest Fall in 6 Weeks; Dow Off 13
The stock market took its sharpest drop in more than six weeks Monday, weighed down by doubts about the outlook for interest rates.
Health-care, financial-services and computer stocks were among the targets of sellers in a session of slower trading.
The Dow Jones average of 30 industrials fell 13.22 to 1,343.86 for its largest loss since it dropped 16.24 points June 13.
Volume on the New York Stock Exchange came to 95.96 million shares, down from 106.95 million Friday.
There has been widespread talk on Wall Street lately of an impending pickup in the pace of business activity. But some analysts worry that improved economic growth and corporate earnings may have already been taken into account by the stock market in its rally from early May through mid-July.
Interest Rates Rise
Assuming that the economy does strengthen, they say, increased borrowing might exert upward pressure on interest rates. Furthermore, they note, in that kind of climate the Federal Reserve would logically be less inclined to ease its credit policy further.
Meanwhile, the credit markets must continue to absorb large supplies of government securities sold to finance the federal budget deficit.
Interest rates rose in Monday’s activity. Prices of long-term government bonds, which move in the opposite direction from interest rates, showed losses of as much as $5 for every $1,000 in face value.
In the pharmaceutical and health-care sector, Pfizer fell 2 3/8 to 47, American Hospital Supply 7/8 to 44 1/8, SmithKline Beckman 1 3/8 to 67 3/8, Upjohn 1 3/8 to 111 3/4, Humana 1 to 32 1/2 and National Medical Enterprises 1 1/8 to 26 7/8.
Losers in the financial-services group included Merrill Lynch, down 5/8 at 33; Paine Webber, off 1 5/8 at 32, and Phibro-Salomon, down 1 at 42.
National Semiconductor Up
Among computer and technology issues, International Business Machines lost 2 3/8 to 129 5/8, Digital Equipment 5 1/2 to 99, Texas Instruments 3 1/8 to 102 1/2, Data General 1 5/8 to 40 and Burroughs 3/4 to 64.
However, National Semiconductor rose 3/8 to 13 3/4 in active trading. An analyst quoted in Barron’s magazine recommended several semiconductor stocks.
John Blair & Co. tumbled 4 5/8 to 16 3/4. On Friday, the company reported a loss for the second quarter, against a profit of 54 cents a share in the comparable period a year earlier.
In the daily tally on the Big Board, about four issues declined in price for every one that gained ground. The exchange’s composite index fell 1.55 to 109.80.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 115.20 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,710, compared to 2,107 last Friday.
The Wilshire index of 5,000 equities closed at 1,962.571, down 26.227.
Standard & Poor’s index of 400 industrials fell 3.21 to 211.26, and S&P;’s 500-stock composite index was down 2.80 at 189.60.
The NASDAQ composite index for the over-the-counter market dropped 3.68 to 300.94.
At the American Stock Exchange, the market-value index closed at 233.54, down 2.03.
Bond prices edged lower, extending last week’s decline, as traders awaited several economic reports and the government’s announcement later this week of its quarterly borrowing plans.
Auctions in August
Among the reports scheduled for this week are the leading economic indicators for June and the July unemployment figures.
Also this week, the Treasury Department is expected to announce how much it plans to raise at the early August auctions of three-year and 10-year notes and 30-year bonds.
In the secondary market for Treasury bonds, prices of short-term governments fell 3/32 point, intermediate maturities fell 2/32 point and long-term issues were down as much as point, according to the investment firm of Salomon Bros.
