Dow Off 12.91 as Late Stock Rally Fizzles

Stock prices fell Thursday, propelled by a late burst of computerized program trading that extended the market’s losing streak to three days.

The Dow Jones index of 30 industrials, up about eight points in the early going, was down 12.91 at 2,706.88 by the close.

That extended its loss over the last three sessions to 45.21 points.

Advancing issues and declines ran about even in nationwide trading of New York Stock Exchange-listed stocks, with 713 up, 714 down and 569 unchanged.

Big Board volume was 160.16 million shares, compared to 161.80 million in the previous session.

Analysts said the decline was further indication of the market’s move to consolidate its gains.

“If the market isn’t ready for a correction now, it never will be,” said George Adler, Banc One Asset Management’s head of portfolio management.

A number of forecasters have been predicting a correction after the recent gains in the Dow index, which two weeks ago smashed a 2-year-old record. Last Friday, the Dow rose 14.82 to again close at a record 2,752.09.

Adler said that stock prices were digesting their recent gains and that the fundamentals of the market remained sound.

“People are still buying stocks. Money continues to flow into this market,” he said.

Kenneth Spence, director of Salomon Bros.’ technical analysis group, said he does not detect any broad-based selling by institutions.

“I think that after this brief consolidation, the market is going to attempt to push higher. (But) it will be a very selective move to the upside,” said Spence.

But James Andrews, head of institutional trading at Janney Montgomery Scott, said he believes that the market may have reached the upper end of its trading range.

“September and October is generally a consolidating period,” Andrews said. “The bias leans toward the sell side.”

Allergan led the NYSE active list, down 3 3/4 at 20 3/4 on volume of more than 3.16 million shares. The company said its sales this year wouldn’t grow as much as it previously projected.

Tiffany jumped 6 1/8 to 60 3/8. Financier Donald J. Trump received regulatory clearance to invest in the stock.

Losers among the blue chip industrials included Philip Morris, down 2 at 164 1/4; Procter & Gamble, down 1 1/4 at 124 3/4; International Business Machines, down 1/2 at 116 1/4, and General Electric, down 5/8 at 56 5/8.

Applied Biosystems tumbled 3 3/4 to 24 3/4 in the over-the-counter market. The company said its earnings for the quarter ending Sept. 30 would fall short of their level in the comparable period a year ago.

In Tokyo, a weaker yen and softer bond prices again rattled the stock market, depressing stock prices. The 225-share Nikkei average lost 118.75 points to close at 34,152.56.

On the London Stock Exchange, shares recovered strongly from the previous day’s steep fall. Dealers said the market was lifted by a batch of good corporate results and an early modest rally on Wall Street, although this later ran out of steam. The Financial Times 100-share index closed at 2,415.9, up 25.1.

Credit

Bond prices were little changed in uneventful trading.

The Treasury’s closely watched 30-year bond was unchanged from Wednesday, with its yield remaining at 8.10%.

Analysts said there was little activity in the absence of market-moving economic news. Traders are awaiting government data due to be released late next week on August retail sales, inflation and merchandise trade.

“This is a thin market,” said William Sullivan, director of money market research for Dean Witter Reynolds Inc.

In the secondary market for Treasury bonds, prices of short-term government issues were unchanged to 3/32 point higher, intermediate maturities slipped 1/32 point to 1/16 point, and long-term issues were unchanged, according to Telerate Inc., a financial information service.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.938%, down from 9% late Wednesday.