STOCKS : Dow Falls 14.60 as Many Tire of Fed Inaction

Stocks gave up some of their recent gains Thursday as investors took profits, fed up with waiting for a long-expected interest rate cut to jolt the moribund economy.

The Dow Jones index of 30 industrials, which gained 71.04 points in the week’s first three sessions, dropped 14.60 to 2,545.05. Most broader indexes were off more sharply than the Dow.

Declining issues outnumbered advances by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 591 up, 918 down and 470 unchanged.

Big Board volume came to 151.37 million shares, against 179.31 million the previous session.

“It’s just some profit taking,” said Michael Metz, market strategist at Oppenheimer & Co. “There may be some disappointment the Fed hasn’t been more aggressive with interest rates.”

Since late last week, Wall Street has been counting on the Fed to lower interest rates in an effort to ward off recession. A mounting pile of data indicates that the country is in an economic slowdown. But no outright rate cut has materialized, so weary investors decided to take profits instead, cashing in on stocks’ recent gains.

A round of program selling, which can wipe points off the Dow in seconds, accelerated the late-afternoon fall. The Dow was off 23 at one point.

“I think the market is marking time to the tune of the Federal Reserve to see if they’re going to do more than technical moves to the system,” said Gene Jay Seagle, director of technical research at Gruntal & Co.

While the central bank added reserves to the banking system Thursday--an action that could mean that it was increasing the money supply and pushing rates lower--analysts said the move was too ambiguous to offer much hope.

Edward Shopkorn, general partner in institutional equity trading at Mabon Nugent, said some of the market’s hesitancy may be related to today’s expiration of certain stock options contracts.

Among the market highlights:

* Some bank stocks bogged down after recent gains. J.P. Morgan fell 3/4 to 40 3/4, Chemical Bank dropped 3/8 to 12, Chase Manhattan fell 3/8 to 10 3/4, NCNB lost 1 1/8 to 23 1/4 and Barnett Banks dropped 1 1/8 to 20 1/2.

But Wells Fargo rose 1 7/8 to 55 1/2. A Montgomery Securities analyst said the bank is expected to complete its current examination by federal regulators without suffering. Also rising were Security Pacific, up 3/8 to 23 3/4, and First Interstate, up 1/8 to 21 3/4.

* Monarch Capital tumbled 3 to 2 1/2, a 54.5% drop. The insurance firm reported a $67.79-million loss for the third quarter, including discontinued operations, and suspended the dividend on its preferred stock. Other financial services firms losing ground included Travelers, down 1/2 to 13 5/8, and Broad Inc., off 1/2 to 3 1/2.

* Many consumer products stocks, recent favorites, were hit. Tambrands tumbled 5 1/8 to 82 after analysts at Merrill Lynch, Kidder Peabody and Morgan Stanley cut estimates, citing rising costs for product marketing. Other losers included Gillette, off 2 to 58 1/4, Kellogg, down 1 7/8 to 70 1/2, and CPC, off 1 3/8 to 79 1/2.

Dairy giant Borden tumbled 2 to 27 3/4 after its chief said fourth quarter earnings may rise only slightly.

* Motorola fell 3 3/4 to 52 1/4. Traders cited a downgrade by a Merrill Lynch analyst.

* House of Fabrics rocketed 1 3/4 to 29, a new high, after a Montgomery Securities analyst reiterated an aggressive buy on the fabric retailer, citing expected strong sales growth. More women are expected to make their own clothes rather than buy them in a slowing economy.

* MCA rose 2 3/8 to 67 7/8 pending talks scheduled for next week about its potential acquisition by Matsushita.

In foreign trading, Tokyo stocks closed lower after a day of light trading marked by an absence of buying enthusiasm. The key 225-share Nikkei index fell 449.96 points to 23,487.48. In afternoon trading today, the Nikkei lost another 458 points.

German shares ended higher in moderate, mostly technical trading, with investors drawing confidence from the market’s relative stability this week. The 30-share DAX index was up 14.97 points to 1,421.19.

Share prices also finished higher on London’s Stock Exchange. The Financial Times 100-share index was up 16.4 points to 1,599.6.

CREDIT: Bond Buyers Await Inflation Report

Bond prices fell slightly in sketchy trading, as investors sat on the sidelines awaiting today’s release of the government’s monthly measure of consumer prices.

The Treasury’s bellwether 30-year bond fell 3/16 point, or $1.88 per $1,000 in face amount. Its yield, which generally rises when prices fall, edged up to 8.53% from 8.51% late Wednesday.

Traders said the dip in bond prices marked the end of a two-week surge sparked by intensified fears that the nation has slipped into a recession. Bond prices tend to rise in recessionary times.

But Thursday, traders said they held back their buying in anticipation of signs of heightened inflation in the consumer price index for October, the report scheduled to be released this morning.

Also, traders were unsure whether the Federal Reserve had eased interest rates in a technical injection of funds into the banking system Thursday.

The federal funds rate, the interest on overnight loans between banks, traded at 8%, up from 7.875% late Wednesday.

CURRENCY: Dollar Gains on Yen, Mark in Quiet Day

The dollar closed higher against both the German mark and the Japanese yen as a quiet market rested from recent days of heavy dollar-selling.

The dollar closed at 1.475 German marks in New York, up from Wednesday’s 1.472. It finished at 129.60 yen, up from 129.00 Wednesday.

The British pound fell to $1.957 from $1.960 Wednesday.

COMMODITIES: Wheat Prices Suffer a Sharp Decline

Wheat prices fell sharply on the Chicago Board of Trade--to near contract lows--on mild weather conditions and a dearth of export business.

On other commodities markets, soybeans rose, corn fell, gold and platinum ended slightly higher, silver slipped and meat and livestock futures were mixed.

Wheat prices settled 7.75 to 4 cents lower, with the contract for delivery in December at $2.47 1/2 a bushel.

“Nothing. That’s what traders are seeing in the way of export business in the grains,” said Mickey Luth, an analyst for Shearson Lehman Hutton Inc. in Chicago.

Recent weather forecasts predicting above-normal temperatures in the regions where winter wheat is grown also pressured futures prices, Luth said.

Gold and platinum ended slightly higher on New York’s Commodity Exchange, due partly to Japanese buying of platinum and an early rally in crude oil prices.

Gold settled $1.40 to $1.50 higher, with December at $380 an ounce. Silver settled 7.1 cents to 5.7 cents lower, with December at $4.11 an ounce. Platinum settled $1.30 to $1.80 higher, with January at $415.70.

Energy futures on the New York Mercantile Exchange slid as traders continued to bet on peace in the Persian Gulf.

Light sweet crude settled 10 cents lower to 80 cents higher, with December at $31.12 a barrel.