Bond Prices Fall in Volatile Trading Session

Bond prices tumbled Monday but closed above their lows of the day in volatile trading that analysts said was spurred largely by uncertainty over the state of the U.S. economy.

Analysts pointed to various factors, including general economic uncertainty, a lack of strong retail participation and a record 45.75-point drop Monday in the Dow Jones industrial average, as aiding the bearish movement.

Government bond prices rose during early trading in an extension of Friday’s market rally but slid at mid-session, with the 30-year Treasury issue dropping by nearly $25 per $1,000 of face value before recovering toward the close. In late trading, the bellwether 30-year bond was down about $10 per $1,000 in face amount, with its yield rising to 7.77% from 7.67% late Friday.

The federal funds rate traded at 6.875%, compared to 6.75% late Friday.

On the New York Stock Exchange, the Dow industrial average fell to 1,840.15 on volume of 123.33 million shares.

Standard & Poor’s index of 400 industrials fell 6.31 to 269.11, and S&P;’s 500-stock composite index was down 5.71 at 239.96. The NASDAQ composite index for the over-the-counter market lost 5.52 to 394.73. At the American Stock Exchange, the market value index closed at 276.45, down 4.09.

Among the blue chips, International Business Machines dropped 3 1/8 to 146 3/4 and Eastman Kodak 2 3/8 to 59 3/4.

Losses of more than a point were also common among major bank stocks. J. P. Morgan fell 1 3/4 to 84 1/2, Citicorp 1 1/2 to 58 3/8, Chemical New York 1 1/8 to 50 5/8 and Chase Manhattan 2 1/8 to 40 3/8.