Leery Traders Cash In; Dow Slips to 13.35 Loss
Stock prices posted a moderate loss today, extending Tuesday’s pullback from record highs.
The Dow Jones average of 30 industrials, down 10.19 on Tuesday, dropped 13.35 points today to 2,911.65.
Declining issues outnumbered advances by about 4 to 3 on the New York Stock Exchange, with 626 up, 868 down and 509 unchanged.
Big Board volume totaled 164.02 million shares, against 199.72 million in the previous session.
The NYSE’s composite index fell .78 to 199.15.
Analysts said traders were cashing in some of the gains from the market’s recent run-up.
Market participants also seemed leery of chasing after stocks as a few misgivings spread about the chances for any further sharp drop in interest rates.
A Wall Street Journal article published this morning argued that the Federal Reserve didn’t appear in any hurry to tighten credit on the basis of recent signs that economic growth had slowed.
The story said Fed officials still are inclined to pursue policies aimed at curbing inflation, rather than easing credit.
Bond prices drifted in a narrow range today as traders awaited more evidence on the direction of the economy.
The Treasury’s benchmark 30-year bond was unchanged at midday as its yield held at 8.45%, the same as late Tuesday.
Analysts said trading was very light in the absence of new government reports that could indicate trends in the economy.
A report last Friday that showed slower-than-expected growth in May employment figures triggered a furious rally that pushed yields on 30-year Treasury bonds to a four-month low.
Bond prices have changed little since Friday, however, and analysts say there are no potentially market-moving reports scheduled from the government this week.
Next week, the government plans to report on retail sales, trade and consumer prices, and analysts say those reports could provide a clearer picture on the state of the economy and chances that the Fed will encourage lower interest rates.
“It’s really incredibly quiet here,” said Nancy Vanden Houten, a money market economist for Merrill Lynch Capital Markets.
She said an economic report “would have to be something that really changes the market’s view of things before it will move a lot.”
In the secondary market for Treasury bonds, prices of short-term governments were off 1/32 point, intermediate maturities fell 1/16 point and long-term issues were unchanged to up 1/16 point, according to the Telerate financial information service.
The movement of a point is equivalent to a change of $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 outstanding Treasury issues with maturities of a year or longer, lost 0.15 to 1,159.69.
Yields on three-month Treasury bills rose to 7.97% as the discount rose 3 basis points to 7.72%. Yields on six-month bills rose to 8.05% as the discount rose 4 basis points to 7.64%. Yields on one-year bills rose to 8.09%.
