Dow Drops 40.97 After Closing In on Record
Stock prices suffered a broad setback today in a sluggish late-summer session.
The Dow Jones average of 30 industrials fell 40.97 points to 2,647.00, for its biggest one-day loss since it dropped 46.47 points on June 29.
Declining issues outnumbered advances by more than 3 to 1 on the New York Stock Exchange, with 371 up, 1,164 down and 423 unchanged.
Big Board volume totaled 136.80 million shares, against 145.81 million in the previous session.
The NYSE’s composite index tumbled 2.67 to 189.97.
Interest rates fell in early trading in the credit markets, then reversed course and headed higher as the day progressed.
Analysts said many traders remained skeptical that rates would go lower in the immediate future.
The Federal Reserve is generally believed to be holding off on any more moves to relax its credit policy until it can see more evidence that inflation has been successfully restrained.
The Dow average began the day within striking distance of the closing high of 2,722.42 it reached two years ago this week. Brokers noted, however, that it has stalled in that area for last the several sessions.
When stocks showed no sign of making a new run at that peak today, sellers took control.
Bond prices rose in slow trading today largely on technical factors after Friday’s choppy session.
A decision by the Federal Reserve Board to allow Japanese primary dealers to remain in the U.S. bond market also boosted prices slightly, analysts said.
The Treasury’s benchmark 30-year bond was up 19/32 point, or about $5.90 for every $1,000 in face value by late morning. Its yield, which moves in the opposite direction from price, was down to 8.09% from 8.15% late Friday.
“Today is a carry-over of what went on in the market on Friday,” said Maria F. Ramirez, managing director and money market economist for Drexel Burnham Lambert Inc. “People are taking some profits, taking advantage of the strength in the market.”
Traders said very light volume tends to exaggerate price movements.
