Uncertainty Puts Pressure on Market; Dow Dips 5.14
The stock market declined for the eighth straight day today in relatively low volume, pressured by jitters in the bond market and by ongoing inflation worries.
The Dow Jones average of 30 industrials declined 5.14 points to end the day at 2,371.33.
Declining issues outnumbered advancers by about 4 to 3 on the New York Stock Exchange, with 804 issues down, 612 up and 539 unchanged.
Big Board volume totaled 150.09 million shares, against 135.13 million in the previous session.
The NYSE’s composite index fell 0.46 to 170.80.
At the American Stock Exchange, the market value index dropped 0.76 to 345.09.
The market opened on an up-note, then drifted lower as economic uncertainty set in.
Early in the day, many buyers withdrew from the market to await the start of the Treasury’s three-day auction of notes and bonds. Investors also were reluctant to make commitments ahead of Friday’s wholesale price data, market observers said.
The bond market took a nose dive late in the day after the first round of the government auction. Stocks followed, with program selling dominating the action.
Analysts said that the bond market had anticipated a more enthusiastic response from foreign investors to the Treasury’s $9.75-billion sale of three-year notes.
“Apparently the auction didn’t go so well,” said Michael Metz, vice president of Oppenheimer & Co.
Before the sale, observers had predicted that stock prices would follow the bond market’s reaction.
Analysts said the stock market also remained cautious in anticipation of Friday’s government report on producer prices, which will provide additional information about the economy’s growth.
The producer price index has particular significance for the market after last week’s unemployment report, which provided mixed signals, traders said.
“So the concern is shifting to stagflation,” said Alfred E. Goldman, vice president of the investment firm A. G. Edwards & Sons Inc. Stagflation refers to a condition of stagnant economic growth coupled with inflation.
