Stock Prices Decline; Dow Down 3.75 Points

The stock market declined slightly Friday, biding its time through Inauguration Day.

The Dow Jones index of 30 industrials slipped 3.75 to 2,235.36, closing out the week with a net gain of 9.29 points.

Declining issues outnumbered advances by about 8 to 7 in nationwide trading of New York Stock Exchange-listed stocks.

Volume on the floor of the Big Board came to 166.10 million shares, down from 192.03 million in the previous session.

Weighed on Equities

Analysts said the market had benefited in recent weeks from increasing expectations for George Bush’s presidency.

In his address, President Bush urged compromise and negotiations on such issues as the budget deficit. Shortly after the speech, the dollar and bond prices softened, weighing on equities.

Wariness ahead of the expiration of certain stock options added pressure to stock prices, traders said. Paul Hennessey, vice president of trading at Boston Co., said that amid a paucity of other news “more attention is being paid than deserves” to the expiration of stock options.

“After the advance we’ve seen in the Dow over the last two months, it probably will be more positive if the market settled down and consolidated,” said Marshall Acuff, portfolio strategist at Smith Barney, Harris Upham.

“I think the momentum is still going to the upside,” said Prudential-Bache trader William Bee. “Psychology is changing: Institutions are getting more positive after having missed a bit of the rally and we’re seeing a little more interest from retail investors.”

Digital Equipment rose 2 1/2 to 107 3/8. On Thursday, the company reported quarterly earnings that surpassed analysts’ estimates.

United Technologies jumped 1 1/8 to 43 7/8. The company reported record earnings for 1988.

Holly Farms Corp. shares gained 1/2 to 62 7/8 after it rejected Tyson Food’s sweetened $63.50-a-share offer, which values the chicken processor at $1.15 billion.

Texas Air Corp.’s stock gained after an investment group working with unions of Texas Air’s Eastern Airlines unit said it may make a bid for Eastern. Texas Air climbed 1 1/8 to 14 1/4.

Caterpillar Inc., which fell sharply Thursday after the company said 1989 earnings would be flat, continued its decline, losing 1 1/4 to 59 7/8.

Stock prices fell in Tokyo on worries over the direction of domestic interest rates following rate hikes in Europe and higher oil prices. The Nikkei 225-share index fell 141.02 points to 31,170.38, adding to Thursday’s 43.15-point loss.

On the London Stock Exchange, share prices closed higher, overcoming early profit taking that threatened to curtail the market’s recent solid advances. The Financial Times-Stock Exchange 100-share index closed 6.7 points higher at 1,917.5.

CURRENCY

Central banks renewed their attack on the dollar Friday in the second straight day of coordinated intervention to knock the currency off its recent 3 1/2-month highs.

The Federal Reserve, West German Bundesbank and six other central banks sold dollars, reinforcing their commitment to drag the U.S. currency down, dealers said.

Friday’s dollar trading “was a continuation of yesterday’s trend,” said Robert Ryan, a senior foreign exchange trader with Irving Trust Co.

“We’ve been buying, buying, buying since Dec. 1 . . . and finally the central banks forced some profit taking,” Ryan said.

On Thursday the Fed, Bundesbank and eight other central banks dumped between $750 million and $1 billion on the market. While Friday’s actions were not as aggressive, the back-to-back nature of the dollar attack made the banks’ intentions perfectly clear, dealers said.

“This relentless intervention has taken some of the gumption out of the market,” one dealer said. “Enough people have lost enough money to make us less courageous.”

Richard Witten, vice president for foreign exchange at Goldman, Sachs & Co., said the dollar moved up when President Bush referred to the federal budget deficit in his inaugural address, but fell back when Bush offered no specifics for closing the gap.

Trading was light, dealers said.

Ryan said activity on Monday and Tuesday would give an indication of whether the dollar will continue to soar.

In London, one British pound cost $1.7670 late Friday, more expensive for buyers than Thursday’s $1.7615. In later New York trading, the pound rose to $1.7765 from $1.7650.

Other late dollar rates in New York, compared to late Thursday’s prices, included: 1.8365 West German marks, down from 1.85475; 1.5600 Swiss francs, down from 1.5775; 6.25975 French francs, down from 6.3225; 1,346.125 Italian lire, down from 1,359.40, and 1.18935 Canadian dollars, up from 1.18725.

Tables begin on Page 5