NEW YORK — Stock prices tumbled for the second straight session Wednesday, yielding to a late wave of selling amid continuing concern about the outlook for interest rates.
The Dow Jones average of 30 industrials fell 36.39 to 2,530.19, bringing its loss during the past two days to 82.85.
Volume on the New York Stock Exchange totaled 195.74 million shares, against 136.24 million Tuesday.
Analysts said traders remained uneasy about prospects for interest rates. Rates were mixed to higher in the credit markets Wednesday.
At intervals through the session, weakness in interest rate futures spilled over into stock index futures, brokers said.
That prompted professionals engaged in computer program trading to buy the futures and sell packages of the individual stocks that make up the indexes.
"People are afraid of this market because of its volatility," said Ed Laux, a trader with Kidder, Peabody & Co. That fear is exacerbated as the market nears Friday's "triple-witching hour," when stock options, stock index futures and index options expire together, causing wide price swings. At that point, program traders must settle up their outstanding positions.
Recent Rally Wiped Out
Experimental procedures have been adopted to try to smooth out the volatility that has occurred on such occasions. However, analysts said some investors have apparently opted to step out of the way of whatever this expiration might bring.
The decline of the past two days has wiped out the gains recorded in a rally late last week and extended the market's pullback that began three weeks ago. Since the Dow industrial average hit a record closing high of 2,722.42 on Aug. 25, it has fallen 192.23, or a little more than 7%.
A big chunk of Wednesday's total volume was concentrated in a single issue, Detroit Edison, which slipped to 15 on turnover of more than 33 million shares.
That activity was attributed largely to short-term trading strategies based on the company's impending quarterly dividend.
Among actively traded blue-chip industrials, International Business Machines fell 7/8 to 156 5/8; Eastman Kodak dipped 3/8 to 99; General Electric eased 3/4 to 59; American Telephone & Telegraph declined 1/2 to 31 5/8, and American Express fell 1 to 36.
Mattel was one of the few gainers on the active list, adding 5/8 to 15. Trading in Mattel shares was fueled by rumors that New World Entertainment, the Los Angeles film company that recently lost a bid for Kenner Parker Toys, was considering bidding for Mattel.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,119, up from Tuesday's 2,469.
Declining issues outnumbered advances by about 2 to 1 on the NYSE. The exchange's composite index lost 1.47 to 176.51.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 222.69 million shares.
NYSE officials, meanwhile, said they will halt trading at 1:50 p.m. EDT today to commemorate the 200th anniversary of the U.S. Constitution.
In the bond market Wednesday, prices were little changed after plunging Tuesday.
The Treasury's 30-year bond was up 1/8 point, or about $1.25 for every $1,000 in face value. Its yield eased to 9.67% from 9.68% late Tuesday.
In trading Tuesday, the bellwether issue slumped about $16.75 for every $1,000 in face value.
Analysts said there was no specific reason for dealers' reluctance to buy and hold bonds. "This market has been characterized by a great lack of activity," said Anthony Naylor, senior vice president-fixed-income securities at Rodman & Renshaw.
The Treasury on Wednesday said that it will auction $23.25 in two-, four-, and seven-year notes next week to replenish government coffers.
In the secondary market for Treasury bonds, prices of short-term government issues were unchanged to 1/32 point higher; intermediate maturities were 5/32 point to 1/32 point lower, while 20-year issues were up 1/16 point.
In corporate trading, industrials and utilities were off 1/8 point in light trading, according to Salomon Bros.
The federal funds rate, the interest on overnight loans between banks, was quoted at 7.63%, down from 7.25% late Tuesday.