Blue Chips Sag in Late Trading; Dow Falls 13.08

The stock market finished lower Thursday as the blue chips sagged amid some late selling.

The Dow Jones average of 30 industrials changed direction a number of times. It stayed close to Wednesday’s closing level until the final few minutes, when selling sent the blue-chip indicator to its lowest level of the day and left it with a 13.08-point loss at 1,855.86.

Losing issues outnumbered gainers by about four to three on the New York Stock Exchange.

Volume on the Big Board came to 128.98 million shares, up from 117.04 million Wednesday.

The market’s erratic behavior was partly caused by apprehension on the eve of a “triple witching hour,” which occurs on the last trading day for a set of futures contracts on stock indexes, options on stock indexes and options on individual stocks.

The computer-driven buying and selling maneuvers used by professionals on such days has occasionally caused wide price swings.

Dart & Kraft was one of the most heavily traded stocks, gaining 3 to 60 3/8, a 52-week high. The diversified food firm announced plans to split into two independent companies.

Chromalloy American, another active issue, moved ahead by 2 3/8 to 23 7/8, also a 52-week high. Sun Chemical said it is seeking to acquire the 64% of Chromalloy that it does not already own.

The credit markets slumped, with prices of some actively traded government bonds dropping about $10 for each $1,000 in face amount as dealers became discouraged about the chances of lower interest rates.

The pessimism on rates surfaced in early trading in response to a column in the Washington Post, which reported that five of the seven Federal Reserve Board governors were reluctant to cut the discount rate until a clearer picture of economic activity emerges, market analysts said.

But Raymond W. Stone, chief financial economist of Merrill Lynch Capital Markets, said the negative reaction to the column’s assertion was unwarranted.