Dow Off 29.64; Inflation Fears Rattle Market : Consumer Price Report to Be Released Today

The stock market fell sharply for the second straight session Monday under pressure from new inflation worries.

The Dow Jones index of 30 industrials dropped 29.64 to 2,262.50, extending its loss over the past two trading days to 78.21 points.

Declining issues outnumbered advances by more than 3 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 357 up, 1,156 down and 430 unchanged.

Volume on the floor of the Big Board came to 151.26 million shares, down from 242.90 million on Friday, when the total was swollen by the so-called triple witching hour involving expiring options and futures on stock indexes.

Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 179.35 million shares.

Friday’s news that the producer price index of finished goods rose a full percentage point in February for the second consecutive month caught many traders by surprise.

Interest rates jumped as investors quickly concluded that the Federal Reserve was likely to tighten credit further in its efforts to keep inflation in check.

Rates were higher again Monday in the credit markets. Interest rates on three-month to one-year Treasury bills climbed about 20 basis points, or hundredths of a percentage point.

More evidence of trouble is expected today when the Labor Department reports on the consumer price index for last month.

International Business Machines led the active list, down 3 at 109 1/2 on top of a 5 5/8-point drop Friday, when the company said its first-quarter earnings would fall short of analysts’ estimates.

Tokyo share prices suffered their largest single-day loss this year in a sharp reaction to the Dow’s slide on Friday. The Nikkei 225-share index fell 366.21 points to close at 31,654.80.

Stocks declined on the London Stock Exchange, reflecting what brokers called persistent worries about further rises in U.S. interest rates. The Financial Times-Stock Exchange 100-share index closed 19.5 points, or 0.9%, lower at 2,053.6.

CURRENCY

The dollar drifted lower in quiet U.S. trading after gaining ground overseas.

Gold prices strengthened. Republic National Bank of New York said gold was bid at $395.50 an ounce as of 4 p.m. EST, up $3 from Friday’s late bid.

Currency traders said the dollar started out firmer following its rise in Europe and Asia but that internal market influences and fears of central-bank intervention depressed demand.

“The sentiment is still bullish, though, based on expectations of higher interest rates,” said Earl I. Johnson, a trader at Harris Trust & Co. in Chicago.

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 0.85 Japanese yen to a closing 131.92 yen. It was quoted at 132.10 yen in London, and at 131.275 yen in New York, down from 131.70 yen Friday.

In London, the British pound fell to $1.7115 from $1.7135 on Friday. Later, in New York, sterling stood at $1.7190, up from $1.7130.

On the Commodity Exchange in New York, gold bullion for current delivery closed at $396.10 an ounce, up from $393.60 Friday.

Gold traded in London at $396, up from $393.25.

COMMODITIES

Wheat futures prices fell sharply on reports that badly needed rain in the Great Plains had improved growing conditions for the winter wheat crop.

Other grain and soybean futures advanced, with soybeans posting some fairly strong gains. On other markets, precious metals were mixed; copper futures fell; livestock and meat futures were mostly higher, and energy futures finished mostly lower.

Wheat settled 5.75 cents to 8.25 cents lower on the Chicago Board of Trade, with the contract for delivery in March at $4.2625 a bushel; corn was 1 cent to 2 cents higher, with March at $2.7925 a bushel; oats were 0.50 cent lower to 1 cent higher, with March at $2.09 a bushel, and soybeans were 2.75 cents to 8.50 cents higher, with March at $7.7675 a bushel.

The wheat market had opened lower and remained depressed throughout the morning after the weekend rain in the Plains States. Selling increased in the afternoon, doubling wheat’s losses, following reports that wind-driven snow had closed several highways, including Interstate 70, in western Kansas, an area especially in need of moisture.

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