Dow Sinks 148 Amid Worries Over Inflation

The Dow Jones industrial average fell nearly 150 points Friday on signs that underlying inflation was showing some unwanted vitality and as long-term interest rates soared to the highest levels since July.

The Dow fell 148.36 points to close at 6,391.69, its third drop of more than 140 points in 11 sessions. The blue-chip average, which just a month ago was sporting a gain of nearly 10% on the year, has now erased all of this year’s gains, closing Friday 56 points below where it ended Dec. 31.

The broad market also posted stiff losses after bond-market interest rates jumped to a nine-month high following Friday morning’s reports on wholesale prices and retail sales.

The plunge left many analysts doubtful about whether the stock market’s recent correction--a term usually used to describe a drop of at least 10%--is as close to completion as some were hoping during the modest rebound seen earlier this week.

“It’s really not a fluke or simply a decline by the averages. It’s an extraordinarily wide, pervasive decline. It’s people wanting to reduce their exposure to equities,” said Michael Metz, chief investment strategist of Oppenheimer & Co., noting that declining issues outnumbered advancers by a whopping 6-to-1 ratio on the New York Stock Exchange in moderate trading.

A surprising jump in underlying wholesale prices in March forced investors to recast their outlook for inflation and interest rates.

As bonds prices fell Friday, the yield on the Treasury’s benchmark 30-year bond rose as high as 7.19% before settling at about 7.16%, its highest finish since July and up from Thursday’s 7.10%.

The Standard & Poor’s 500-stock list fell 20.69 points to 737.65, its worst decline since March 8, 1996, and leaving it slightly below its starting point for the year.

The technology-laden Nasdaq composite index fell 28.87 points to 1,206.90, leaving it with a 6.5% loss for the year and 13% off its all-time high set in January.

The NYSE composite index fell 9.89 points to 389.47.

Among Friday’s highlights:

* The biggest loser in the Dow, which lost 134.38 on the week, was J.P. Morgan, down 4 1/2 at 93 1/2.

But tobacco giant Philip Morris was the Dow’s biggest gainer, after it was reported the White House may be willing to facilitate a global settlement of tobacco industry litigation. Philip Morris, which also split its stock 3-for-1 Friday, rose 5/8 to 38 5/8.

* Interest-rate-sensitive financial issues were among the hardest hit. Chase Manhattan was down 3 7/8 to 90 1/4; Bank of New York was off 1 7/8 to 33 7/8; Citicorp shed 5 1/4 to 104 7/8; NationsBank dropped 2 1/4 to 55 1/2; Banc One Corp. declined 1 3/4 to 39 1/2; and First Union slid 3 5/8 to 78 1/4.

Investment banks and credit card companies slid as well: Salomon fell 3 1/4 to 50 3/8, Advanta dropped 1 13/16 to 20 5/16, and Raymond James Financial slid 1 3/8 to 21 5/8.

* Technology stocks were also broadly weaker. Intel tumbled 6 3/4 to 130 1/2, in part on concern about the company’s plans to cut microprocessor prices, which would probably erode profit.

Boston Scientific slid 14 3/8 to 46 1/8 after the company warned that its first-quarter results would fall short of analysts’ estimates.

Ascend Communications, down 2 11/16 to 43 11/16, and Cascade Communications, down 2 to 28 3/8, fell after the computer-networking firms’ earnings reports showed slowing sales growth.

Overseas, Tokyo’s Nikkei stock average rose 2.1%, Frankfurt’s DAX index fell 0.3%, and London’s FTSE-100 fell 1%.

Market Roundup, D4