Dow Declines 4.28; Little Response to Drexel Action

The stock market declined slightly today, registering no strong response to news of a settlement in the case of Drexel Burnham Lambert Inc.

The Dow Jones index of 30 industrials dropped 4.28 to 2,160.36.

Declining issues outnumbered advances by about 10 to 9 on the New York Stock Exchange, with 690 up, 773 down and 517 unchanged.

Big Board volume totaled 150.51 million shares, against 147.25 million in the previous session.

The NYSE’s composite index lost .23 to 155.50.

After the close on Wednesday, Drexel, the powerful investment banking firm known for its expertise in takeovers and “junk bonds,” announced an agreement to plead guilty to six counts of securities fraud charges and to pay $650 million in fines.

That marked the climax of a long insider trading investigation by the government.

Analysts noted that investors had many months in advance to anticipate the prospective outcome of the inquiry.

Indeed, some said, the agreement that emerged Wednesday seemed at first glance to have less potentially disruptive impact on the junk bond market and on pending takeover deals than had been widely feared.

Bond prices were mixed in quiet, pre-holiday trading today.

The Treasury’s 30-year bond edged up 1/16 point, or about 62 cents for every $1,000 in face value, by around midday. Its yield, which moves inversely to its price and is often an indicator of interest rate trends, slipped to 8.93% from 8.94% late Wednesday.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill.

Yields on three-month Treasury bills, meanwhile, rose to 8.38% as the discount increased 3 basis points to 8.11%. Yields on six-month bills advanced to 8.64% as the discount rose 3 basis points to 8.18%. Yields on one-year bills fell to 8.94% as the discount declined 3 basis points to 8.27%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8 13/16%, up from 8 3/4% late Wednesday.