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Dow Off 7.97 as Dollar Declines, Interest Rises

June 21, 1989|From Associated Press

NEW YORK — The stock market retreated today in the face of a declining dollar and rising interest rates.

The Dow Jones average of 30 industrials dropped 7.97 to 2,464.91, bringing its loss since the start of the week to 21.47 points.

Declining issues outnumbered advances by about 7 to 5 on the New York Stock Exchange, with 595 up, 833 down and 509 unchanged.

Big Board volume totaled 168.83 million shares, against 167.65 million in the previous session.

The NYSE's composite index slipped .30 to 179.19.

The dollar fell this afternoon against leading foreign currencies. And prices of long-term government bonds dropped about $5 for each $1,000 in face value, increasing their yields to the 8.33%-to-8.35% range.

Many Wall Streeters lately have speculated that stock prices might be due for a pause or pullback after their strong advance since late last year.

Analysts said a Fed report on economic conditions around the country helped ease market concern that the central bank might need to drive interest rates higher but didn't inspire stock-buying enthusiasm.

The report, known as the "beige book," indicated that growth is slowing and that inflationary pressures have eased in response to an anti-inflation campaign waged by the Fed.

Bond prices slipped from earlier highs today amid reports that central banks were making a concerted effort to dampen the dollar's rise.

The Treasury's benchmark 30-year issue was down about 1/8 point, or $1.25 per $1,000 face amount before midday, after rising 11/16 point on Tuesday. Its yield, which moves in the opposite direction from its price, edged up to 8.29% from 8.28% late Tuesday.

Analysts said bond prices followed the dollar's upward movement early in the day but began dropping by mid-morning on word that the Federal Reserve had intervened in the foreign exchange market to stem the dollar's rise.

In addition to selling dollars, the Fed reportedly was selling short-term dollar-denominated securities on behalf of foreign investors, they said.

The federal funds rate, the interest on overnight loans between banks, was trading at 9 1/2%, up from 9 3/8% late Tuesday.

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