Dow Dips 0.19 in Late Selling Despite Reports

A late bout of selling sent stock prices tumbling just before the closing bell despite good news on the inflation front that had kept prices firmer during much of the session.

The Dow Jones average of 30 industrials fell 0.19 to 2,687.31.

Advancing issues narrowly outpaced decliners on the New York Stock Exchange, with 712 issues up, 709 down and 532 unchanged.

Big Board volume totaled 141.61 million shares, against 136.94 million in Monday’s session.

The NYSE’s composite index edged up 0.03 to 192.46.

At the American Stock Exchange, the market value index fell 0.67 to 378.83.

The market opened higher after two new economic reports suggested that inflationary pressures had eased further during August. But although blue-chip stocks gained, the broader market lagged behind, traders said.

Wall Street analysts said the data--the Labor Department’s report that the consumer price index remained unchanged in August at 0.2% and the Commerce Department report that housing construction fell 5% in August--suggested an easing of inflationary pressures and added to hopes that the Federal Reserve would loosen monetary policy by lowering interest rates.

Junk Bond Rally

Although institutional trading was light, selling by institutions early in the afternoon wiped out some of the market’s earlier gains. The market showed some confidence after a rally in the junk bond market on the heels of Canadian retail giant Campeau Corp.’s announcement that it had secured a $250-million loan to pay its creditors.

Junk bond prices had fallen sharply in recent sessions after word of Campeau’s financial troubles raised concern about the viability of the high-yield, high-risk securities. Campeau had used junk bonds to finance recent acquisitions.

But late in the day, stocks retreated under pressure of a late bout of computer-driven program selling. Transportation and pharmaceutical stocks were among the few standouts in an otherwise featureless session, traders said.

Bond prices rose slightly today on a new government report showing the best performance in consumer inflation in more than three years.

The Treasury’s closely watched 30-year bond was up 1/8 point, or $1.25 for every $1,000 in face value, at around midday. Its yield, which falls when its price rises, had declined to 8.07% from 8.09% late Monday.

The market “had a good set of data this morning,” said Mitchell Held, chief financial economist for Smith Barney, Harris Upham & Co. “We should have had a better reaction.”

In today’s trading in the secondary market for Treasury securities, prices of short-term government issues were up 1/32 point, intermediate maturities had risen 1/32 point to 3/16 point, and 20-year issues had gained 1/8 point, according to figures provided by Telerate Inc., a financial information service.