Dow Off 38.59; Report on Trade Deficit Blamed

The stock market fell to a 2 1/2-month low today as Wall Street’s post-election slide resumed.

The Dow Jones index of 30 industrials dropped 38.59 to 2,038.58, its lowest close since it stood at 2,002.31 on Sept. 1.

Declining issues outnumbered advances by more than 4 to 1 on the New York Stock Exchange, with 296 up, 1,216 down and 443 unchanged.

Big Board volume totaled 161.71 million shares, against 115.17 million in the previous session.

The NYSE’s composite index lost 2.37 to 148.96.

The broad-based decline came as international currency traders gave a cool reception to the latest statistics on U.S. trade.

Before the market opened, the Commerce Department reported that the nation’s trade deficit narrowed to $10.46 billion in September from $12.27 billion the month before.

The latest figure, while it suggested improvement in a basic problem on many investors’ minds, came in very close to advance estimates in the financial community. Thus, analysts said, it didn’t really serve as new information.

The dollar fell in foreign exchange, prompting some pressure on the stock market.

At the same time, brokers noted, stocks were still confronted with competition from high interest rates, especially in short-term interest-bearing investments that carry virtually no risk.

Treasury bond prices fell in early trading today after the government report on the trade deficit.

The Treasury’s bellwether 30-year bond lost 3/8 point, or $3.75 per $1,000 face amount, by midday.

Its yield, which moves inversely from its price and is a key indicator of interest rate trends, jumped to 9.06% from 9.01% late Tuesday.

Although the trade-gap figure was smaller in September, it was toward the high end of market expectations and raised the possibility that the dollar would need to fall further to make U.S. goods cheaper in world markets.

As a result, the dollar fell sharply today against most major currencies, and that pushed down the value of bonds, too.

Bond traders worry that a weak dollar will drive up interest rates and spark higher inflation while making dollar-denominated securities less attractive to foreign investors.

The federal funds rate, the interest on overnight loans between banks, traded at 8 3/8%, down from 8 5/8% late Tuesday.