Dow Plummets 28 in Late Selling Spree

Late selling drove Wall Street stocks down to close sharply lower today, erasing all of Monday’s 21-point gain in the Dow Jones industrial average.

The key index closed down 28.37 points at 2,766.00.

Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, with 548 stocks rising, 959 falling and 461 unchanged.

Big Board volume totaled 155.21 million shares, against 140.11 million in the previous session.

The NYSE’s composite index fell 1.98 to 193.35.

At the American Stock Exchange, the market value index slipped 1.18 to 380.44.

Traders said a burst of computer-driven program selling was largely responsible for the decline, most of which came in the last hour of trading. For most of the day, the Dow index was little changed.

On Monday, when the Dow Jones average rose more than 21 points, most of the gain was also attributed to late program trading.

In addition prices were pushed down today by a lower dollar and a weak Treasury bond market.

Analysts said the market could not find a direction in the absence of any news. No economic indicators are scheduled to be released until the end of the week, and many traders were also waiting for fourth-quarter earnings reports before making any major commitments.

Bond prices were unchanged to slightly higher today as a small rebound in the dollar encouraged a bit of buying.

The Treasury’s benchmark 30-year bond was up 1/16 point at midday, dropping its yield to 8.08% from 8.09% late Monday.

A rally in the dollar provided most of the lift for the credit markets during the morning, said Elliot Platt, research director at Donaldson, Lufkin & Jenrette Securities Corp.

Analysts attributed Monday’s drop in bond prices to a falling currency. The dollar slid sharply after leading U.S. banks cut their prime lending rate. However, the dollar had recouped much of its losses by midday.

Long-term Treasury bonds gained up to 1/4 point in early trading, Platt said, but gave up much of the gains later in the morning as oil prices rose.

Many traders fear a cold-induced rise in oil prices in recent weeks could push inflation higher. Inflation erodes the value of fixed-income securities such as bonds.

In the secondary market for treasuries, prices of short-term government issues were mostly unchanged, intermediate maturities were unchanged to up 1/16 point and long-term issues were up 1/16 to 5/32, according to Telerate Inc., the financial information service.

A point is equivalent to $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.66 to 1,183.72.

Yields on three-month Treasury bills fell to 7.78% as the discount fell 2 basis points to 7.54%. Yields on six-month bills fell to 7.79% as the discount fell 2 basis points to 7.41%. Yields on one-year bills fell to 7.76% as the discount fell one basis point to 7.26%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8 5/16%.