Dow Ends Its 2nd-Worst Week Ever With 10-Point Drop

Stock prices were mixed Friday, drifting through a quiet session that closed out the second-worst week of point losses ever for the Dow Jones industrial average.

The news of the latest discount rate reduction by the Federal Reserve Board drew only a muted response from investors, except in the case of some utility and financial issues that gained ground.

Dow Jones’s average of 30 blue chips dropped 10.40 to 1,821.43, bringing its loss for the week to 79.44 points. The only larger weekly decline posted by the average was an 82.50-point drop last March 31 to April 4.

Friday’s volume on the New York Stock Exchange came to 124.47 million shares, down from 146.16 million on Thursday.

Late Thursday, the Fed announced a cut in its discount rate to 6% from 6.5%. On Friday, most large banks across the country lowered their prime lending rates to 8% from 8 1/2%.

Wall Street had been hoping for some time that the Fed would take new measures to relax its credit policy in an effort to stimulate economic growth, which has been sluggish of late.

But analysts said the move had been so widely anticipated on Wall Street that it stirred up little fresh enthusiasm once it became official. They said many investors weren’t convinced that a cut to 6% by itself would assure an improvement in the pace of business activity and corporate profits.

Centerior Energy led the NYSE active list, up 3/8 at 25 in trading that included numerous large blocks. Brokers said the stock was the subject of trading strategies by institutional investors focused on the utility holding company’s quarterly dividend payment.

Among other utility issues, Pacific Gas & Electric rose 1/2 to 23 7/8, Cincinnati Gas & Electric 1 1/8 to 26 7/8, Utah Power & Light 7/8 to 31 7/8 and Philadelphia Electric 7/8 to 21 5/8.

Savings and loan stocks, which tend to be very sensitive to interest rate changes, showed some gains. Gibraltar Financial added 1/2 to 12 3/8 and Great Western Financial 3/4 to 46 3/8.

Pittston gained 1 to 12. The company said directors authorized a repurchase program of as much as 3.5 million shares.

Hasbro, which trades on the American Stock Exchange, rose 3/4 to 53 7/8. The company declared a 2-for-1 stock split and an increase in its quarterly dividend.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,088, compared to 2,749 on Thursday.

In the overall tally on the Big Board, advancing issues outnumbered declines by about six to five. The exchange’s composite index slipped 0.17 to 139.51.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 148.09 million shares.

Standard & Poor’s index of 400 industrials fell 1.51 to 268.78, and S&P;’s 500-stock index was down 0.79 at 242.22.

The Wilshire index of 5,000 equities closed at 2,495.479, down 3.030.

The NASDAQ composite index for the over-the-counter market lost 0.48 to 391.55. At the Amex, the market-value index closed at 273.65, up 0.52.

In the credit markets, most bond prices fell in what financial analysts called market disappointment over the Fed’s half-point cut in the discount rate.

Economists say the anticipation of a discount rate cut was already built into bond prices, which move inversely to interest rates.

“This is a classical case of buying on the rumor and selling on the news,” said Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis.

Market Disappointed

“I think the market also was pretty disappointed that the cut was only half a point, because some expected it to be 1 (point),” he said.

Many analysts say speculation has now shifted to when the next round of interest rate cuts might occur. Some argue that the Fed will wait until the central banks of Japan and West Germany cut their rates.

A report quoting Japanese financial officials in Tokyo as saying they do not anticipate any immediate cut in their rates contributed to the dampened mood in U.S. credit markets, analysts said.

The Treasury Department’s key 30-year bond was off about $2 for each $1,000 in face value, and its yield rose to 7.18% from 7.12% late Thursday. Yields on most short-term issues rose slightly.

In the secondary market for Treasury bonds, prices of short-term governments were mostly unchanged, intermediate maturities fell point and long-term issues were down 3/32 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.

Industrial, Utilities Fall

In corporate trading, industrials and utilities fell 3/8 point in active dealings.

Among tax-exempt municipal bonds, general obligations remained unchanged and revenue bonds were down about 3/4 point in moderate trading.

Yields on three-month Treasury bills were down 1 basis point to 5.74%. Six-month bills rose 1 basis point to 5.80%. One-year bills were up 1 basis point at 5.81%.