NEW YORK — The stock market suffered another broad setback today, extending Wall Street's early-1990 slide as worries mounted about rising interest rates and pressure on the Japanese market.
The Dow Jones industrial average regained some ground after tumbling more than 60 points at the opening after traders learned overnight of a sharp decline in the Tokyo stock market, which has been unsettled lately by rising interest rates in Japan.
Bargain-hunting and program trading helped Wall Street regain some ground, but the market remained pessimistic.
The Dow Jones average of 30 industrials fell 10.81 to 2,604.50.
Big Board volume totaled 207.83 million shares, against 179.30 million in the previous session.
The NYSE's composite index fell 0.96 to 182.64.
At the American Stock Exchange, the market value index dropped 5.06 to 354.67.
Analysts said the drop in the Japanese market intensified fears that rates would have to climb further in this country to stay competitive in the international marketplace.
The Treasury's sale Tuesday of 40-year bonds to finance a rescue plan for troubled thrift institutions drew a very chilly reception from investors.
As the outlook for interest rates has worsened, investors have begun to face the possibility that the recent slowdown of the economy might deepen in the months ahead.
Brokers also said a weak attempt by stocks to rally on Tuesday left many traders unimpressed and disheartened.
Prices of long-term Treasury bonds gave more ground in early trading today, continuing a decline touched off late Tuesday by the market's poor reception to a government auction of 40-year bonds.
Short-term prices edged higher, however, and short-term interest rates slipped, an apparent reflection of investors gravitating to those issues in reaction to another big decline in stock prices.
The Treasury's benchmark 30-year bond, which lost nearly a full point on Tuesday, was off by another 11/32 point, or $3.40 per $1,000 face amount, by midday today. Its yield, which rises when prices fall, climbed to 8.41% from 8.39% late Tuesday.
"This is a negative follow-through from yesterday's auction," said Elizabeth Reiners, money market economist for Dean Witter Reynolds.
Market watchers said the Resolution Funding Corp. had to pay higher rates on interest--an average of 8.6%--than had been expected to sell its $5-billion supply of 40-year bonds that are being used to finance the thrift industry bailout.
Reiners said the poor reception to the 40-year-bond sale indicated that "there maybe isn't a lot of interest for this longer-dated paper" and that there won't be much bidding interest in the government's quarterly refunding auctions that are to be announced next week and sold in early February.
In addition, she noted that recent increases in interest rates in Japan relative to those in the United States have led to speculation that Japanese investors may not be as avid buyers of Treasury securities as they have been in recent years. If demand for those issues is weak, the government may have to offer higher rates of interest to sell the securities.
In the secondary market for Treasury securities, prices of short-term governments were up 1/32 point, intermediate maturities were mixed with some up 1/16 point and others off 1/32 point and long-term issues were down as much as 11/32 point.