Dow Retreats From Its Record Level; Off 16.73

Wall Street stocks retreated today from the previous day’s record close as some investors took profits and others waited for more news about the U.S. economy.

The Dow Jones industrial average fell 16.73 points to 2,726.63 after falling 22 points earlier in the day.

However, issues in the transport sector broke new ground on continuing takeover speculation.

The Dow Jones transportation average surged 13.69 points to a record 1,506.58, led by a rally in shares of AMR Corp., parent of American Airlines.

In the broader market, declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, with 859 up, 614 down and 484 unchanged.

Big Board volume totaled 175.21 million shares, against 131.18 million in the previous session.

The NYSE’s composite index fell 0.98 to 194.47.

Analysts said many market participants were away on vacation or stayed on the sidelines in advance of Friday’s unemployment report for August. The market drifted lower until mid-afternoon, when the program selloff began.

Wall Street shrugged off the Commerce Department’s report that the gross national product, the broadest measure of the economy’s performance, grew by 2.7% from April through July, a significant change from the 1.7% growth rate originally reported last month. The news eased fears that the economy was slipping into a recession.

The report also contained good news about inflation. A closely-watched gauge tied to the GNP indicated inflation did not worsen during the second quarter despite the strength in the economy.

But the GNP report “was a non-event” in the stock market, said analyst Michael Metz of Oppenheimer & Co.