Dow Plunges Record 61.87 as Investors Turn Gloomy : Declines Top Gains by 6 to 1

A wall of bearishness sent the stock market in full retreat today pushing the Dow Jones Industrial Average down more than 61 points--its worst one-session decline ever.

Participants attributed the sharp drop to a sudden bout of pessimism as some key analysts turned bearish on the market. Continuing worries over the weak economy and the growing opinion that any upcoming discount rate cut already has been anticipated in prices added to the negative sentiment, they said.

The Dow Jones Industrial Average dropped an unprecedented 61.87 points to 1,839. It headed south from the opening bell and was down more than 40 points for most of the session until the final hour when the bottom literally blew out.

Previous Record Smashed

The point decline smashed the previous record drop, which occurred June 9, when the industrial average lost 45.75 or 2.4%, to 1,840.15. In percentage terms, however, the blue chip index’s loss was minimal when compared to the Oct. 29, 1929, decline, when the average sank 12.8%, shedding 38.33 points of its value.

Declining stocks on the Big Board overpowered advancers by nearly 6-to-1 as 139.8 million shares changed hands, up from 108.3 million Thursday. (The market was closed Friday for the holiday.)

Traders and analysts said the pessimism that kept prices under unrelenting pressure was largely due to the bearish outlook from John A. Mendelson, head of market analysis at Dean Witter Reynolds. Mendelson, who has been a bull on the stock market for the past two years, today said the second leg of the bull market that began in 1984 is about over. The analyst said he expects a 15% to 20% decline in popular averages over the next several months.

Interest rates that have bottomed out, narrowing leadership, and declining volume were among the reasons he cited for his change of heart.

Tables in Business section.