Stocks Slump in Lackluster Session : Dow Falls 6.63, Ending 5-Day Rally; Inflation Jitters Cited

Stock prices finished lower Thursday in one of the year’s slowest sessions after a drop in U.S. bond prices and interest rate fears undermined shares.

The Dow Jones industrial index fell 6.63 points at 2,041.28, the first loss by the blue chip average in six sessions.

Brokers said the market was burdened by fears of higher interest rates following lower-than-expected U.S. jobless claims that suggested the economy might be overheating.

“The stock market was undermined by a weak bond market all through the session,” said Shearson Lehman Hutton analyst Newton Zinder. “U.S. Treasury bonds were down half a point all day, closing at their lows. It was a big depressant.”

Prices of long-term government bonds showed losses of more than $8.505 for each $1,000 in face value, putting their yields at 9.10% from 9.02% late Wednesday.

“That was the story of the stock market today--a drag on bond prices and extraordinarily light trading,” Zinder said.

Michael Metz, analyst at Oppenheimer & Co., said the stock market’s recent advance ran out of steam on Wednesday, when secondary issues finished mixed.

Big Board volume came to 128.68 million shares, down from 133.81 million on Wednesday and the lightest total since 111.58 million shares were traded last Dec. 29.

Declining issues outnumbered advances by about 4 to 3 in the daily tally of New York Stock Exchange-listed trading, with 621 up, 850 down and 483 unchanged.

Market in Doldrums

Brokers also noted that the slow pace of activity suggested that the market was still suffering more from caution than from any wholesale selling.

But that was small consolation to traders who have watched stocks make little progress over the past several weeks, except for pockets of takeover activity and brief, sharp swings attributed to computer program-driven trading.

The best gainer on Thursday’s NYSE active list was Lucky Stores, up 5 3/8 at 61 1/2 on volume of more than 3.3 million shares. The company, which has been resisting the takeover advances of American Stores, said it agreed to a $61-a-share buyout by a New York investment firm.

Ford Motor, which reported higher first-quarter earnings, eked out a 1/8-point gain to 47 5/8.

Losers among the blue chips included International Business Machines, off 7/8 at 113 1/8; General Motors, down 1 at 75 1/2; RJR Nabisco, down 1 1/8 at 51, and Sears, Roebuck, down 3/8 at 35 7/8.

Banc One rose 1 to 23 5/8. The stock was added to Standard & Poor’s 500-stock index, prompting buying by index funds set up to duplicate as closely as possible the performance of the 500.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 151.93 million shares.

The NYSE’s composite index lost 0.61 to 148.33.

The Wilshire index of 5,000 equities closed at 2,615.078, down 9.194.

Standard & Poor’s industrial index fell 1.45 to 306.09, and S&P;’s 500-stock composite index was down 1.19 at 262.61.

The NASDAQ composite index for the over-the-counter market edged up 0.10 to 378.77. At the American Stock Exchange, the market-value index closed at 301.50, up 0.34.

In foreign trading, share prices closed sharply higher in Tokyo on active bargain hunting after Wednesday’s fall, taking the Nikkei index to a new peak despite the overnight passage of a sweeping trade bill by the U.S. Senate.

The Nikkei 225-share index climbed 242.15 points to a record 27,434.12. It lost 54.80 points Wednesday.

On the the London Stock Exchange, stock prices fell after a bumpy ride that left many investors nervous before an announcement of British trade data for March.

The Financial Times 100 share-index fell 2.3 to close at 1,804.4.