NEW YORK — Stock prices fell Monday, depressed by profit taking, investor fears of continued sluggish economic growth and some computer program selling, analysts said.
The Dow Jones average of 30 industrials closed at 1,871.77, down 16.03 from Friday.
Losers outpaced gainers by nearly two to one. Volume totaled a light 104.35 million shares, compared to 118.13 million shares on Friday.
"Basically what we saw was a day of consolidation after the substantial gains of the last few weeks," said Newton D. Zinder, an analyst with E. F. Hutton.
From Aug. 1 through Friday, the closely watched Dow industrial index rose 124.16 points, rebounding from the period of correction in July.
But as Monday's session began, the market was pushed down quickly by pre-programmed computer selling, in which professional traders, operating with large amounts of money, engaged in a strategy involving stock index futures and individual stocks, analysts said.
The Dow Jones average fell by as much as 17 points, then rose a bit to hover about 13 points below Friday's close for most of the rest of the day.
David Jones, an analyst at Aubrey G. Lanston & Co., said he believed the main reason for the market's performance was "a good deal of uncertainty on the economic outlook and how much interest rates will fall on the discount rate cut."
Last Wednesday, the Federal Reserve Board cut the discount rate, the rate it charges on loans to financial institutions, to 5.5% from 6%. It was the fourth cut this year.
But most major banks, breaking with recent tradition, failed to follow with corresponding cuts in the prime rate--the rates they use in determining loans for their biggest customers.
This has some investors worried that "this could be a signal that interest rates are bottoming out," said Eugene Peroni, an analyst with the Los Angeles securities firm of Batemen Eichler, Hill Richards. "There is some uncertainty as to when and if these lower interest rates can become a cure-all elixir for the economy."
Sluggish growth in the economy, among other things, would reflect low corporate earnings, thereby discouraging higher stock prices.
International Business Machines was among the day's winners, closing up 1 to 139. Burroughs rose 5/8 to 73, while Honeywell fell 1/2 to 71 3/8.
ICN Pharmaceuticals fell 6 to 21 3/4 and was among day's most active issues on the New York Stock Exchange. The stock fell after reports questioned an earlier analysis based on a drug that ICN is testing on patients with AIDS.
Among other drug companies, Eli Lilly was down 3 at 77, Upjohn fell 2 1/2 to 87 and SmithKline Beckman dropped 1 7/8 to 90.
Sears, Roebuck fell 1 3/8 to 45 7/8.
Beneficial Corp. was off 1 3/8 at 71 5/8. On Friday, Beneficial leaped 28 1/2 after the company said it was planning a major restructuring.
Montana Power was down 2 3/8 to 40 after a report that estimated that the company's 1986 and 1987 earnings would be lower. Texas Utilities led the NYSE most active list at 36 7/8, down 1/2.
UAL Inc. was up 1 5/8 at 54 5/8 following reports that People Express would put its Frontier Airlines subsidiary into bankruptcy protection--a move that dimmed prospects that UAL's United Airlines unit would acquire Frontier.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 125.14 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,979, compared to 2,295 on Friday.
The Wilshire index of 5,000 equities closed at 2,526.764, down 20.986.
Standard & Poor's index of 400 industrials fell 2.47 to 272.77, and S&P's 500-stock composite index was down 2.38 to 247.31.
At the American Stock Exchange, the market-value index fell 0.98 to 269.94.
The NASDAQ composite index for the over-the-counter market closed at 379.26, down 2.26.
In the credit markets, bond prices turned higher and short-term interest rates fell after a late-session rally that highlighted an otherwise lackluster trading day.
"It was very quiet," said Jay Goldinger of Beverly Hills-based investment firm of Cantor, Fitzgerald & Co.
Dealers say this week traditionally is one of the quietest of the year in terms of bond trading because it comes right before the Labor Day holiday.
"Those who are going to make the market are on vacation, and those who aren't wish they were," said Ward McCarthy, a credit market analyst with Merrill Lynch Capital Markets.
In the secondary market, the bellwether 30-year bond was up 17/32 point to yield 7.23%, down from 7.27%. The 20-year bond was up 3/4 point.
Prices of short-term governments rose 1/8 point and intermediate maturities rose 11/16, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials were unchanged and utilities fell 5/8 point in light trading.