* Small-company stocks led share prices lower for a second day Wednesday as investors worried about the economy and corporate profits.
* For the fourth time in as many sessions, the 30-year bond yield hit its lowest level since the Treasury began regularly auctioning the bonds in 1977. Gold prices rose.
For a second day, stocks started in negative territory and never looked back, although they recovered from their intra-day lows.
Analysts attributed the selloff to a combination of concern about the economy following last week’s spate of bad economic news and the selling of stocks that have run up in value during the summer rally of the last two months.
The Dow Jones industrial average fell 18.17 points to 3,588.93. Declining issues outnumbered advances by about 7 to 3 on the New York Stock Exchange. Big Board volume came to 283.10 million shares, up from 229.5 million the day before.
Partly because of concern about the economy, the NASDAQ composite index, one of the best-known measures of small-company stocks, led the pack down, tumbling 8.62 to 730.73.
NASDAQ stocks were depressed by falling health care and communications stocks.
Among the market highlights:
* Baxter International slumped 3 1/2 to 22 7/8 after the company predicted lower quarterly results.
* Pacificare A lost 5 3/4 to 34. It will get only an average 2.5% increase on Medicare premium rates. Oppenheimer took Pacificare off its “recommended” list.
* Oxford Health slid 6 3/4 to 63 3/4, United Healthcare lost 3 3/4 to 56 1/2 and U.S. Healthcare shed 2 to 44.
* Among technology stocks, Hewlett-Packard lost 2 3/4 to 68 3/8 while IBM fell 1 1/8 to 44 3/8.
* Borland International lost 2 to 15 after brokerage houses cut their earnings estimates on the computer software maker.
* USAir fell 1 1/2 to 13 1/8 after Donaldson, Lufkin & Jenrette downgraded the carrier’s stock.
Lower stock prices abroad added to the day’s negative sentiment. Tokyo’s 225-share Nikkei average lost 43.91 points to close at 20,918.19. In London, the Financial Times 100-share average ended 3.2 points lower at 3,035.4 and Frankfurt’s 30-share DAX average edged down 0.67 points to finish at 1,885.29.
With little new economic data to move the market, long-term bond yields fell, pushing prices higher, due partly to momentum carried over from Tuesday’s rally spurred by a plunge in gold and other commodity prices.
The 30-year bond yield plunged to 5.86% from 5.89% on Tuesday. Its price, which moves in the opposite direction from yield, closed up 7/16 point, or $4.38 per $1,000 in face value.
The federal funds rate, the interest on overnight loans between banks, was 3%, down from 3.125% on Tuesday.
In precious metals trading, gold futures rose modestly after traders failed to push the metal below $350 an ounce following Tuesday’s sharp drop. Gold for current delivery closed at $351.20 an ounce, up $1.10 over Tuesday’s close. Silver closed at $4.218 an ounce, off 4.3 cents.
October light, sweet crude oil fell 4 cents to $17.03 a barrel.
In currency trading, the dollar finished at 105.60 Japanese yen, up from 104.25 yen Tuesday. It closed at 1.6128 German marks, down from 1.613.
Market Roundup, D6
Dow Jones Industrial, Sept. 8, 1993: High: 3,623.331, Close: 3,588.93, Low: 3,561.27
New York Volume, Sept. 8, 1993: 283.19 million shares