NEW YORK — The stock market drifted lower Monday, extending its post-election slump through a fourth consecutive session as worries that a weak dollar would force U.S. interest rates higher overrode investors' interest in bargain-priced shares.
Still, the market was notably less nervous than it was on Friday when the Dow Jones index of 30 industrial stocks plunged 47.66 points. On Monday, the Dow slipped only 1.95 points to 2,065.08, bringing its loss over the four trading days since the election last Tuesday to 62.41 points.
The calmer trading came as President-elect George Bush took steps to ease fears that his Administration would favor a lower dollar and would be stymied in its efforts to bring down the federal budget deficit.
Bush said that he favored stability in the dollar's value and indicated that he would move vigorously to address the deficit problem.
The Dow's slight decline on Monday tended to understate continued deterioration in the stock market. Declining issues outnumbered advances by about 8 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with Big Board volume rising to 142.90 million shares, against Friday's 135.50 million.
"Basically, nervousness over the dollar and interest rates drove the stock market lower," said Michael Metz, a market strategist for Oppenheimer & Co. "There wasn't enough bargain-buying to turn the market around," he added.
Earlier the Dow had been up about 10 points as investors bought shares that were left attractively priced after Friday's sell-off.
But stock market analysts said investors were hesitant to buy ahead of the U.S. trade report for September, which is due Wednesday morning. A figure larger than expected could drive the dollar lower in the currency markets.
"The feeling is, if the dollar doesn't hold, then what will the Federal Reserve do with interest rates?" said Victor Pugliese, head trader with Nomura Securities Ltd.
Economists say the dollar's weakness, coupled with evidence showing that the U.S. economy is not slowing on its own, may force the Fed to raise interest rates, and that, in turn, would lure funds away from the equities market.
The benchmark 30-year Treasury bond ended lower Monday, raising its yield, an indicator of interest rate trends, to 9% from 8.99%.
The dollar edged higher Monday after the Federal Reserve and the Bank of Japan intervened in the foreign exchange markets, buying dollars for yen.
The dollar closed at 123.75 Japanese yen, compared to 122.85 at Friday's close. But the currency's midterm outlook remains poor, reflecting doubts in the United States and abroad that President-elect George Bush will move quickly to cut the U.S. trade and budget deficits.
"The malaise continues to be there. . . . We're still worried about where the dollar is going," said trader Larry Greenwald with Sanford C. Bernstein & Co.
Furthermore, analysts say, there are no positive factors offsetting the impact of a weaker dollar on the stock market. "I haven't seen any sign of underlying strength," said Anthony Tabell, managing director of Delafield, Harvey, Tabell Inc.
Petrie Stores took the day's biggest percentage drop among NYSE issues, tumbling 3 1/2 to 15 1/2. Chairman Milton Petrie, who had said he was considering an offer to buy the company's shares he doesn't already own, announced that he had decided to drop the idea.
Control Data fell 1 1/2 to 17 3/4. The company said it may report a loss for the fourth quarter that could bring its results for the year down to the break-even point.
Among actively traded blue chips, Exxon rose 1/8 to 42 7/8 and International Business Machines gained 1/2 to 117 1/8, while American Telephone & Telegraph was down at 27 7/8 and Merck dropped 5/8 to 55 3/8.
Takeover Target Gains
TW Services fell 3/4 to 23 5/8. A member of the investment group Coniston Partners was determined to pursue its bid for a big chunk of TW's stock, despite a New York Times article citing obstacles to its potential success.
Alco Health Services jumped 3 1/8 to 28 1/2 in the over-the-counter market. The company said it agreed to be acquired for $31 a share by a group of investors that includes members of its management.
The Wilshire index of 5,000 equities ended at 2,647.534, down 4.820.
The NYSE's composite index of all its listed common stocks dipped 0.20 to 151.04.
Standard & Poor's industrial index fell 0.38 to 307.73, and S&P's 500-stock composite index was down 0.20 at 267.72.
The NASDAQ composite index for the over-the-counter market dropped 1.40 to 372.36. At the American Stock Exchange, the market-value index closed at 289.40, down 2.08.
In foreign trading, stock prices in Tokyo rose slightly to a record close in moderate trading Monday as the continued buying of financial shares buoyed the Nikkei index. The Nikkei 225-share index climbed 31.33 to a record close of 28,520.90.
On the London Stock Exchange, stock prices closed lower after a day of choppy trading. The Financial Times 100-share index fell 8.4 to 1,794.3.