NEW YORK — Stocks retreated Friday from the record highs attained the day before, pushed back by profit taking as a sharp rise in oil prices revived concerns about inflation and interest rates.
The Dow Jones industrial average slid 14.19 points from Thursday's record close to 2,436.86. It was up 16.01 for the week.
On the New York Stock Exchange, declines led advances 903 to 591 as volume slipped to 150.5 million from 173.5 million on Thursday.
The jump in oil prices depressed bond prices and gave equity investors an excuse to take profits after the powerful stock market gains of the past several weeks.
"We have come a long way in the last few weeks, but today we got a little ambushed by profit taking," said analyst Larry Wachtel of Prudential-Bache Securities. The Dow industrial index has risen 220 points since May 20.
Signs of a possible compromise on a production agreement at OPEC meetings in Vienna caused oil prices to rise sharply. The August spot crude price jumped 60 cents a barrel to $20.24.
Prudential-Bache's Wachtel said that the unexpectedly poor demand for Treasury issues at an auction ended Thursday got the bond market off on the wrong foot. But the stock market failed to take much notice until later in the day as bond prices fell more steeply, pushed down by the oil price jump.
Too Much at Once
"Investors just couldn't deal with strong crude oil prices and a weak bond market at one time," said trader Jon Groveman of Ladenburg Thalmann & Co.
The decline was orderly, analysts said, and losses were modest, at least partly because professional money managers were busy buying stocks ahead of the fiscal quarter's end Tuesday.
"If it weren't for some end-of-quarter window-dressing, I think stocks would have fallen further," Groveman said. In a good quarter such as the one about to end, portfolio managers are eager to show a high amount of shareholdings in public reports at the end of the period. Groveman said he expects selling to pick up after the quarter ends.
Also keeping a floor under the market was a steady stream of takeovers and takeover rumors.
Among the takeover stocks, Transamerica, a financial services company, jumped in the afternoon amid rumors that Ford Motor or Primerica might be interested in buying it. It rose 3 to 42 7/8.
Reichhold Chemicals, which rose 18 on Thursday after receiving a tender offer from Japan's Dainippon Ink & Chemicals Inc., added 1/2 to 61.
Also in the group of stocks that has rallied on takeover news, JWT Group rose 2 to 55 1/8. The advertising company agreed to a $566-million merger with British-based WPP Group.
Among blue chips, American Telephone & Telegraph slipped 1/8 to 28 1/2 and International Business Machines lost 1 3/8 to 166 1/2, while Ford Motor gained 2 to 102.
Among market barometers, the Big Board's composite index of all its listed common stocks lost 0.88 to 172.67. Standard & Poor's index of 400 industrials fell 1.83 to 356.48, and S&P's 500-stock composite index was down 1.80 at 307.16. The Wilshire index of 5,000 equities closed at 3,031.415, down 13.653. The NASDAQ composite index for the over-the-counter market lost 0.52 to 426.68. At the American Stock Exchange, the market-value index closed at 337.69, up 0.21.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 177.09 million shares. In bond markets, the Treasury's bellwether 30-year bond fell 21/32 point, or more than $6.25 per $1,000 face amount, after losing 5/16 point on Thursday. Its yield increased to 8.48% from 8.42%.
A sharp drop in prices overnight on the Tokyo bond market, coupled with a jump in Japanese interest rates, pulled down prices on U.S. credit markets, said Maria F. Ramirez, a managing director for Drexel Burnham Lambert.
Corporate and municipal issues declined.
In the secondary market for Treasury bonds, prices of short-term governments were 1/16 point to 5/32 point lower, intermediate maturities dropped between 1/8 point and 3/16 point and 20-year issues were down 25/32 point, according to figures provided by the financial information service Telerate Inc.
In corporate trading, industrials fell 3/4 point and utilities slipped 1/2 point in light trading, according to Salomon Bros.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds were down 5/8 point, Salomon Bros. said. Trading was light.
Yields on three-month Treasury bills fell 4 basis points to 5.78%. Six-month bills rose 3 basis points to 6.11% and one-year bills were unchanged from Thursday at 6.32%. A basis point is one-hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 6.50%, down from 6.75% on Thursday.