Uneasy Dow Drops 16.18 as Reports Worry Traders

Stock prices retreated broadly today, with blue chip issues leading the way.

The Dow Jones average of 30 industrials dropped 16.18 to 2,610.25.

Declining issues outnumbered advances by about 4 to 3 on the New York Stock Exchange, with 622 up, 818 down and 513 unchanged.

Big Board volume totaled 143.17 million shares, against 140.75 million in the previous session.

The NYSE’s composite index closed at 187.51, with a loss of 0.71.

At the American Stock Exchange, the market value index finished 0.18 lower at 371.52.

Uncertainty about the outlook for lower interest rates and uneasiness about the economy’s condition discouraged buyers.

Several reports released before trading began confirmed economic weakness, particularly in the manufacturing sector.

Retail sales fell a full percentage point in October, and the Commerce Department cited a slumping automobile market. The Federal Reserve reported that industrial production dropped 0.7% in October.

But the statistics didn’t paint a completely clear picture because they were influenced by special circumstances, analysts said. A strike in the aircraft industry and the effect of the California earthquake crimped overall output.

Traders have been hoping that the central bank would mute the effect of the economic slowdown by undertaking a significant loosening of its credit policy. So far, the Fed hasn’t taken any big steps.

U.S. Treasury bond prices rose modestly in light early trading today. By midday, the Treasury’s bellwether 30-year bond was up 1/8 point, or $1.25 per $1,000 face amount. Its yield, which moves inversely to the price, slipped to 7.86% from 7.88% Monday.

In the secondary market for Treasury bonds, prices of short-term governments were up 1/16 to 3/32 point, intermediate maturities were 1/16 to 1/8 point higher and long-term issues ranged from 3/32 to 3/16 point higher, according to the Telerate Inc. financial information service.

The federal funds rate, the interest on overnight loans between banks, was quoted by midday at 8 7/16%, up from 8 3/8% late Monday.