NEW YORK — Stock prices weakened Tuesday, breaking a series of record gains in what many Wall Street analysts called an overdue respite caused by profit takers.
"A day like this is not only inevitable, it's welcome, frankly," said Larry Wachtel of Prudential-Bache Securities, a New York investment firm. "The market had simply gotten into a feeding frenzy."
The Dow Jones average of 30 industrials, which has risen more than 140 points in a little more than a month, retreated 8.60 from its record close Monday to finish the day at 1,544.50. The Dow had set records in five of the past six sessions.
Decliners outpaced gainers by about five to three on the New York Stock Exchange, where volume totaled 155.23 million shares, down from 176.03 million traded Monday.
Not Seen as Threat
The Big Board's composite index, which measures a broader range of issues than the Dow, declined 0.73 to 121.17.
"This breather is not threatening," Wachtel said. "It's simply a matter here of tired blood. The market has been moving up dramatically, and from time to time it pauses. I would say it's a normal phenomenon."
Richard Schmidt of the Hartford-based brokerage Advest Inc. also linked the market's short-term behavior to profit taking and said he expected demand for stocks to remain strong through the end of the year, partly because the number of potential investors has risen rapidly.
"This market today is a market composed of the whole world," he said. "Back in history, we only had to deal with 48 states. The funds available for investment today are many times what they were in the past."
Gainers among the most active NYSE-traded issues included U.S. Air Group at 34 7/8, up 2 1/8, one of the few airlines that did well. The other was TWA, which closed at 18 3/8, up 1 5/8. Texas Air Corp. has offered to buy TWA for $22 a share in cash if New York investor Carl C. Icahn's acquisition collapses.
Decliners on the most active list included Financial Corp. of America, down 1 to 9 7/8; Eastman Kodak, down 1 7/8 at 50 7/8, and General Electric, down 1 1/2 at 71 7/8.
Stocks in oil, steel, aircraft, electronics, forest products, financial and retail businesses suffered near-universal declines, including McDonnell Douglas, down 1 3/4 at 70 3/4; Burroughs, down 2 5/8 at 63; Digital, down 2 3/4 at 130 5/8; Amoco, down 1 3/4 at 61 1/2, and Chase Manhattan, down 1 at 68 1/2.
TRW Stock Fluctuates
TRW's stock temporarily soared 12% on Tuesday amid rumors that the company was a takeover target, but the stock later pulled back after TRW said it could not account for the gain. At one point, TRW's stock was up 10 3/8 a share at 95 1/2, but it closed at 89 1/2.
At the American Stock Exchange, the market value index was 243.85, off 1.73, but Amex volume for the year passed the 2-billion-share mark for the second time in its history. It first reached the 2-billion mark Dec. 14, 1983, and finished at a record 2.08 billion for that year.
In the bond market, prospects of lower oil prices, expectations of a discount-rate cut and an unexpectedly steep drop in housing construction pushed bond prices up.
Long-term interest rates tumbled and rates on shorter maturities posted more moderate declines.
The yield on a benchmark 30-year Treasury bond fell to 9.35%, its lowest level in six years and down from 9.44% late Monday.
The bond rally faded slightly at the end of the day because the federal funds rate failed to ease as much as expected and because of slight disappointment in the results of a Treasury note auction, Jones said.
The federal funds rate--the interest on reserves that banks loan one another overnight--traded at 7.875%, down from 8.25% late Monday.