Dow Falls 12; Stocks Hit by Profit Taking : Trading Activity Is Slowest in 8 Weeks

Stock prices drifted lower Monday in the slowest trading in eight weeks as traders cashed in some of their holdings after last week’s rise to new highs.

The Dow Jones industrial index dropped 12.43 to 2,697.07.

Volume on the New York Stock Exchange totaled 149.35 million shares, down from 189.58 million Friday and the smallest total since a 142.29-million share day June 29.

Analysts said concern over the recent weakness of the dollar in foreign exchange was dampening investors’ enthusiasm.

But observers noted that selling of stocks was not especially intense. They said it appeared that the market was simply taking a pause after a strong summer-long rally, and that many participants were on vacation.

Tobacco stocks were actively traded after rising strongly Friday on word of a court ruling in favor of the industry on a key point in a product liability case.

American Brands slipped 7/8 to 54 1/2 after a 2 7/8-point rise Friday. RJR Nabisco, up 1 at 65 1/2, and Philip Morris, up 1 5/8 at 113 1/8, added to their Friday gains.

Crude Futures Drop

Energy issues declined broadly as oil prices came under continuing downward pressure. Chevron lost 1 to 58 1/8; Exxon fell 1 1/8 to 97 7/8; Mobil lost 1 to 50; Texaco slipped 7/8 to 42, and Atlantic Richfield dropped 1 1/2 to 91.

Crude oil futures for October delivery dropped 30 cents to $18.60 a barrel on the New York Mercantile Exchange.

Declining issues outnumbered advances by about 9 to 5 on the NYSE, with 561 up, 1,017 down and 415 unchanged.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 176.57 million shares.

Bond prices, meanwhile, drifted lower in lackluster trading as the credit markets continued to watch the dollar with a wary eye.

The price of the Treasury’s 30-year bond was down 5/32 point, or about $1.50 for every $1,000 in face value. Its yield rose to 8.98% from 8.96% late Friday.

In the secondary market, prices of short-term and intermediate issues fell between 1/32 point to 1/8 point and 20-year issues slipped 1/16 point.

Yields on three-month Treasury bills rose 6 basis points to 6.15%. The six-month bill rose 2 basis points to 6.26%. The one-year bill was up 2 basis points at 6.56%.

In corporate bond trading, industrial and utility bonds were down 1/8 point in light trading.

The federal funds rate, the interest on overnight loans between banks, was quoted at 6.75%, up from 6.625% late Friday.