Dow Drifts, Then Skids Sharply Again
The decline on Wall Street went into a second day Tuesday as stock traders, searching for a direction, found one in the slumping bond market.
The Dow Jones index of 30 industrials fell 19.77 to 2,467.95.
Declining issues outpaced advancers by a margin of about 11 to 5 on the New York Stock Exchange.
The Big Board volume totaled 186.57 million shares, against 168.14 million Monday.
The bond market’s decline gave direction to an otherwise aimless Wall Street session. The Dow index traded in a narrow range until mid-afternoon, when it dropped sharply.
Many analysts have predicted that the market would correct itself after the Dow index climbed 300 points in two months.
Leading the NYSE most active list was AT&T;, down 3/8 to 30 1/2.
Earnings reports continued to affect the performance of individual stocks. American Express rose 1 1/2 to 33 1/2 after announcing a $47.9-million loss for the second quarter. The company said the results reflected a previously announced charge to cover possible losses from loans to developing nations made by its American Express Bank subsidiary.
Chrysler rose 3/4 to 38 1/2 after announcing its second-quarter earnings are up 20.3% from a year ago.
Among the losers were Xerox, down 2 1/2 to 73 1/2; Merck, off 2 to 180, and IBM, 1 7/8 lower at 162 3/4.
In the bond market, meanwhile, prices sank in thin trading amid some fears of tighter credit.
Analysts said bond market participants became concerned about the prospects for short-term interest rates following testimony by the outgoing and incoming heads of the Federal Reserve Board.
The Treasury’s 30-year bond fell about 1 1/8 points, or about $11.25 for every $1,000 in face value. Its yield jumped to 8.72% from 8.62% on Monday.
“If the short-term cost of money doesn’t come down, it (will) be harder to build a case for bonds,” said Maury Harris, chief economist for Paine Webber in New York.
In the secondary market for Treasury bonds, prices of short-term governments declined 3/32 point, intermediate maturities fell 5/32 point to 1/2 point, and 20-year issues lost 11/16 point.
In corporate trading, industrials fell a point in moderate activity, according to Salomon Bros. Utilities were down 7/8 point.
Among tax-exempt municipal bonds, general obligations fell 5/8 point, while revenue bonds fell 1/2 point in light trading.
Yields on three-month Treasury bills, meanwhile, gained 14 basis points to 5.68%. Six-month bills rose 16 basis points to 5.79%, and one-year bills gained 9 basis points to 6.22%.
The federal funds rate, the overnight interest charged on loans between banks, was quoted at 6.56%, down from 6.675%.
