Dow Index Falls 4.93 as IBM, U.S. Steel Decline

Stock prices took a downward turn Thursday in a session marked by weakness in some prominent blue chips.

The Dow Jones average of 30 industrials, up 3.02 points Tuesday and Wednesday, slipped back 4.93 to 1,362.23.

Since the average reached a record closing high of 1,369.29 on Oct. 17, it has been hovering just below that level.

Volume on the New York Stock Exchange reached 123.14 million shares, up from 121.65 million on Wednesday.

Analysts said the takeover fever that has dominated activity in the market for much of the time lately seemed to have subsided a bit.

They also noted that the big-name stocks that make up the Dow Jones industrial average appeared to be attracting a little less interest, while secondary issues that have lagged behind the Dow were faring somewhat better.

Some observers view these changes as healthy. But they also say more evidence of an improving economy and progress on such problems as the federal budget deficit is probably necessary for the market to move ahead with any great force.

IBM Loses Ground

Among the blue chips, International Business Machines weighed down the Dow with a 1 7/8-point loss to 128 5/8.

U.S. Steel, caught up in rumors that it might be considering acquiring Texas Oil & Gas for stock, fell 1 to 29. Texas Oil & Gas rose 1 1/8 to 19 3/8 and led the active list on turnover of more than 3.9 million shares.

Auto stocks gave ground, with General Motors down 3/4 at 65 5/8, Ford Motor down 3/4 at 46 1/8, Chrysler down 1/2 at 38 and American Motors 1/8 lower at 2 7/8. Figures issued by the industry Wednesday showed a 16.8% decline in domestic car sales for mid-October.

GM and AMC were among the 24 Big Board stocks that traded during the session at new lows for at least the past 52 weeks. There were 56 new highs.

An exception in the blue-chip sector was Procter & Gamble, which rose 1 to 60 1/2. It reported higher quarterly profits.

But McDonnell Douglas fell 4 to 67 1/2. The company reported earnings for the third quarter of $1.81 a share, down from $2.19 in the comparable period a year ago.

Drop in Profits

Homestake Mining, which said it had sharply lower third-quarter profits, dipped 5/8 to 22 1/2.

Declining issues outnumbered advances by about eight to seven in the overall tally on the Big Board. Large blocks of 10,000 or more shares traded on the NYSE totaled 2,500, compared to 2,547 on Wednesday.

Bond prices finished largely unchanged or slightly lower and interest rates also showed little movement over the session.

The Treasury sold $8.3 billion of new 52-week bills at an average yield of 7.51%. It received $25.38 billion of bids for the bills. The average return at the monthly auction was up from 7.33% at September’s sale and was the highest since 7.6% on bills sold in August.

In the secondary market for Treasury securities, prices of short-term governments were unchanged, intermediate maturities fell 7/32 and long-term issues were down 1/8 point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

Late in the session, the Federal Reserve Board reported that the nation’s money supply posted a large drop in mid-October. But the report had little if any impact on bond prices or short-term interest rates.

In corporate trading, industrials were unchanged in active trading and utilities were unchanged in light trading.

Tax-Exempt Bonds

Among tax-exempt municipal bonds, general obligations fell 1/2 point in moderate activity and revenue bonds were down 1/8 point in light trading.

Yields on three-month Treasury bills edged up 1 basis point to 7.27%. Six-month bills rose 4 basis points to 7.42%, while one-year bills were up 4 basis points at 7.50%. A basis point is one-hundredth of a percentage point. Yields on 30-year Treasury bonds were unchanged at 10.38%.

The federal funds rate--the interest on overnight loans between banks--traded at 8.125%, compared to 8.375% late Wednesday.