Dow Plunges 47.34 Amid Interest, Profit Worries

Stock prices dropped sharply today amid persistent concern over the outlook for interest rates and corporate profits.

The Dow Jones average of 30 industrials fell 47.34 points to 2,582.17.

Declining issues outnumbered advances by more than 3 to 1 on the New York Stock Exchange, with 349 up, 1,185 down and 430 unchanged.

Big Board volume totaled 135.48 million shares, against 131.50 million in the previous session.

The NYSE’s composite index lost 2.52 to 184.76.

Wall Street’s view of prospects for corporate earnings has worsened steadily over the past few weeks as reports for the third quarter of the year came in below expectations.

Analysts noted that the first few indications for the fourth quarter have also been negative.

That concern had been at least partly counterbalanced by hopes that the Federal Reserve might soon relax its credit policy further, in order to cushion the impact of slowing economic growth.

But last Friday’s stronger-than-expected employment figures for October dampened that speculation.

Bond prices were lower in slow trading early today amid speculation that the Federal Reserve will not relax its credit policy in the near future.

The Treasury’s closely watched 30-year bond declined 7/16 point, or $4.37 for every $1,000 in face value, by around midday. Its yield, which rises when prices fall, climbed to 7.97% from 7.93% late Friday.

Analysts described the decline as a continuation of Friday’s retreat in bond prices, which was triggered by a government report showing surprisingly strong job growth in October.

Traders believe that the report dims chances for an easing soon in the Fed’s credit policy, which means interest rates are not likely to fall significantly.

“We’re seeing some continued reaction from Friday’s data,” said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc. “The market is reacting a little bit unfavorably now.”

Adding to the market’s nervousness was today’s announcement by the Treasury that it is postponing its weekly auction of three- and six-month bills because Congress has not raised the debt ceiling. The Treasury bill sales normally are held every Monday.

In the secondary market for Treasury securities, prices of short-term government issues slipped 3/32 point to 3/16 point, intermediate maturities were down 3/16 point to 9/32 point and 20-year issues lost 7/16 point, according to figures provided by the Telerate Inc. financial information service.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on outstanding Treasury issues with maturities of a year or longer, fell 3.11 to 1,185.97.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8 3/4%, unchanged from late Friday.