Dow Dips 9.60; Stocks Drop in Profit Taking

The stock market faltered Thursday, unable to carry through on the previous day’s rally despite an afternoon buying spree that briefly put the Dow index at a post-crash high.

The Dow Jones industrial index, which jumped 48.36 points Wednesday, closed down 9.60 at 2,093.35.

Late buying pushed the Dow index to 2,110.8 in the last hour, a hair above the post Oct. 19 high of 2,110.08, but the advance sparked a wave of profit taking that finally left the stock market lower on the day.

Advancing issues outnumbered declines by about 9 to 8 in nationwide trading of New York Stock Exchange-listed stocks.

Volume on the Big Board came to 235.16 million shares, down from 310.03 million in the previous session.

Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 264.80 million shares.

More than one-fourth of the day’s activity was concentrated in stocks with dividends impending. Detroit Edison, the NYSE volume leader, was off 1/8 at 13 7/8 on turnover of more than 30 million shares.

Analysts said a modest upswing in interest rates helped encourage some traders to cash in on the recent gains in stock prices.

Otherwise, they said, signs persisted of increased enthusiasm for stocks among money managers at investing institutions.

Heavier Commitments

Until late last month, fears of rising interest rates and inflation prompted those professionals to keep large amounts of their assets out of the stock market.

But with interest rate fears having cooled and stocks up sharply in the past week and a half, some analysts said money managers might feel mounting pressure to make heavier commitments to stocks in time for their midyear reports to clients.

Some traders were sidelined ahead of today’s report on producer prices, which should give a clue to inflation’s outlook.

Estimates for May’s producer price index report range from a 0.4% rise to as high as 0.7%. The trend of higher commodity prices, due to dry weather in the Grain Belt, may have driven up the index, said Don Hays, market strategist with Wheat First Securities.

“The market was a mixed affair today with everyone waiting for the PPI (report),” Hays said. “But after so much selling two weeks ago, there’s nothing more left to sell and the market’s having a much easier time (moving higher).”

“Investors are not too sure of their footing, resulting in low volume. There’s still a lot of convincing to be done,” said Jerome Hinkle, co-manager of trading at Sanford C. Bernstein & Co.

“We think the best scenario for the market would be moderate growth (in gross national product) of around 2.5%, but it looks like the second quarter will be around 5%,” he said.

Losers among the blue chip issues included Exxon, down 3/8 at 45 3/8; General Electric, 1/2 lower at 43 1/8; American Telephone & Telegraph, off 5/8 at 26 5/8; Coca-Cola, down 3/8 at 38 1/2, and International Business Machines, 1 lower at 115 3/8.

Pannill Knitting climbed 2 1/2 to 9 3/4. Late Wednesday, Sara Lee Corp. said it would make a $10-a-share tender offer for 50% of Pannill.

Broadcaster Soars

Norton Co. rose 6 to 64. The company said it knew of no corporate reason for the increase in its stock price.

Infinity Broadcasting jumped 9 to 30 1/2 in the over-the-counter market. A management group offered to acquire the company for $30 a share.

The Tokyo Stock Exchange’s key indicator closed at a record high Thursday.

The Nikkei 225-share index closed at 28,072.02, up 159.37, surpassing its previous record close of 27,996.24 set Monday.

Share prices on the London Stock Exchange rose, boosted by technical factors and the upward momentum of Wall Street on Wednesday.

At the close, the Financial Times 100-share index ended 13.3 points higher at 1,841.5.