The stock market took a tumble today after an early advance faltered.
Activity was subdued on the eve of a long holiday weekend. The markets will be closed for Good Friday.
The drop in stock prices came despite a slight decline in interest rates in the government bond market.
Analysts said it appeared that investors were worrying increasingly about prospects for corporate earnings later this year and in 1990 if the economy slows, as many analysts expect it to.
“Stagflation--rising prices and sluggish growth--will characterize much of the year,” analysts at Merrill Lynch said in a commentary issued today. “But that environment could give way to an actual recession by the end of the year, as the economy reacts to monetary tightening.”
The Dow Jones average of 30 industrials dropped 20.17 points to 2,243.04, extending its loss for the week to 49.10 points.
Declining issues outnumbered advances by about 5 to 3 on the New York Stock Exchange, with 565 up, 835 down and 538 unchanged.
Big Board volume totaled 153.75 million shares, against 146.57 million in the previous session.
The NYSE’s composite index fell .77 to 162.64
Bond Prices Edge Up
The bond market edged higher early today, extending its gains of the previous two sessions in quiet pre-holiday trading.
The Treasury’s bellwether 30-year bond was up 5/16 point, or about $3 per $1,000 face value, at midday. Its yield, which moves inversely to its price, fell to 9.20% from 9.23% late Wednesday.
Analysts said bond prices were helped by lower oil prices and a higher dollar in the early going. But Steven A. Wood, economist for BankAmerica Capital Markets Group in San Francisco, said the rise was mainly due to technical conditions in the credit market.
“The real key is we are going into a long weekend and no one wants to take a major position either long or short,” he said.
Revision Shrugged Off
He said the market shrugged off the government’s latest upward revision of its estimate of economic growth in the fourth quarter as old news.
In the secondary market for Treasury bonds, prices of short-term governments rose between 1/8 point, intermediate issues were up 1/4 point and long-term maturities rose by as much as 3/8 point, according to Telerate Inc., the financial information service.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The federal funds rate, the interest on overnight loans between banks, traded at 9 15/16 point, down from 10 1/2% late Wednesday.