The stock market slipped Tuesday as a weaker bond market encouraged investors to take profits after a strong two-day rally had sent prices to a post-crash high. Analysts also blamed lingering worries about the economy and interest rates and general investor wariness for the pullback.
The Dow Jones industrial index edged 2.49 points lower to 2,156.47 after bouncing back from a session low of 2,140. On Monday it hit the highest closing level since last October’s crash after climbing 50 points in two sessions. That capped a 150-point rise since the end of August.
Big Board volume came to 140.90 million shares, up from Monday’s 124.66 million.
Declining issues outnumbered gainers by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks. The NYSE composite index slipped 0.19 to 156.77.
But analysts said losses were fairly modest after taking into account the gains of recent sessions, and they expect the setback to be temporary.
Bill Raftery, a market analyst for Smith Barney, Harris Upham & Co., said investors were acting like reluctant grooms being dragged to the altar.
“He’s going in kicking and screaming. There doesn’t seem to be any overwhelming desire to own stocks,” he said.
Analysts said investors continue to exhibit little confidence about the long-term direction for the economy and interest rates.
While some recent government reports have indicated that the economy is growing at a more moderate pace, investors seem reluctant to buy stocks before knowing what the next set of economic statistics may show.
“The market has been living in fits and starts,” said Alfred E. Goldman, director of technical market analysis for A. G. Edwards & Sons Inc. in St. Louis. “Trends last a day and a half, and are usually tied to today’s news.”
He said investors focus on the latest economic report and noted that they have plenty to look to this week. The government plans to report this week on the August trade balance and on September wholesale prices.
Jack Baker, head of block trading for Shearson Lehman Hutton Inc., said the market’s pullback also reflected a decline of the dollar in foreign exchange trading, which serves to discourage foreign investment in U.S. stocks.
He said profit taking also occurred as the market had sent the Dow up nearly 57 points over the past four sessions.
The bond market provided little encouragement for stocks.
Prices were lower and interest rates edged higher, with yields on 30-year Treasury bonds rising to 8.85% from 8.79% last Friday.
Tenneco Stock Dips
Kroger tumbled 2 5/8 to 55 after the investment form Kohlberg Kravis Roberts & Co. withdrew its buyout proposal of $64 a share. Kroger had rejected its overtures and had proposed a restructuring.
Tenneco fell 5/8 to 49 1/8. The company said Monday that it had agreed to sell oil and gas assets for more than $7.3 billion in a series of transactions.
Digital Equipment rose 1 to 89 1/8 after effectively increasing prices on most of its products. Elsewhere in the high-technology group, International Business Machines climbed 2 5/8 to 118 3/4, National Semiconductor was up 7/8 at 10 1/8, Hewlett Packard rose 1/2 to 50 1/2 and Honeywell gained 1/2 to 64.
Among other active issues, Phillips Petroleum rose 1/2 to 20 5/8, Baxter gained 3/4 to 18 7/8, Pillsbury fell 5/8 to 56 3/4 and Best Products slipped 1/8 to 26 3/4.
The Wilshire index of 5,000 equities ended at 2,752.935, down 2.635.
Standard & Poor’s industrial index slipped 0.10 to 319.62, and S&P;'s 500-stock composite index was off 0.31 at 277.93.
The American Stock Exchange market-value index fell 0.32 to 303.77; the NASDAQ composite index dropped 0.21 to 385.28.
In foreign trading, the Tokyo Stock Exchange overcame late profit taking pressure and rallied sharply in moderate trading Tuesday. The Nikkei 225-share index, which gained 85.93 points Friday, climbed 211.33 to close at 27,469.60. The market was closed Monday for a holiday.
Share prices on the London Stock Exchange closed lower Tuesday in lukewarm trading as the market chose to focus on selected speculative situations amid a lack of fresh economic news. The Financial Times 100-share index closed off 5.8 at 1,838.3.