Oil Puts Pinch on Dow, Down 19.80

The stock market gave ground today, faced with revived upward pressure on oil prices.

The Dow Jones average of 30 industrials dropped 19.80 to 2,484.41.

Declining issues outnumbered advances by about 4 to 3 on the New York Stock Exchange, with 620 up, 850 down and 486 unchanged.

Big Board volume totaled 141.46 million shares, against 149.29 million in the previous session.

The NYSE’s composite index fell 1.09 to 169.51.

The price of crude oil for December delivery climbed more than $2 a barrel, to more than $33 a barrel, on the New York Mercantile Exchange.

Analysts said that was enough to squelch a tentative early rally that was credited to hopes for a resolution of the budget impasse in Washington.

A plan put forward overnight by some members of Congress raised hopes that agreement might soon be reached on a government budget, relieving an uncertainty that has been hanging over the markets for the past month.

Analysts agree that the Federal Reserve can’t be expected to consider any move to relax its credit policy until the budget situation is resolved.

Oil prices rocketed higher again as politicians talked more hawkishly about the chance of war in the Persian Gulf. The December crude oil contract on the New York Mercantile Exchange jumped $3.17 to $34.25 a barrel.

Losers among the blue chips included American Express, down 3/8 at 19 7/8; International Business Machines, down 7/8 at 107 3/4; Philip Morris, down 3/4 at 47 1/2, and Ford Motor, down 1/4 at 31 3/4.

MCA climbed 6 to 56. The stock plunged 8 7/8 Wednesday before Matsushita Electric denied reports that merger talks between the two companies had run into trouble.

Prices of government bonds were slightly higher as an end to the haggling over the federal budget came into sight, as did further indications the economy is weakening.

The price of the Treasury’s key 30-year bond, which rose 5/32 point on Wednesday, was up another 5/32 point, or $1.56 per $1,000 in face amount at midday. Its yield, which falls when the price rises, slipped to 8.76% from 8.77%.