Dow Drops 6.08 as Fed Appears Firm on Rates

NEW YORK —  Wall Street stocks fell today in light trading, weighed down by profit-taking and comments by Federal Reserve chairman Alan Greenspan that appeared to reduce chances of an immediate cut in interest rates.

The Dow Jones industrial average fell 6.08 points to 2,785.33. Declining issues outpaced advances by 8 to 7 on the New York Stock Exchange, and volume on the Big Board was thin, with only 149 million shares trading hands.

Greenspan, responding to pressure from the Bush Administration to cut interest rates and bring the dollar down, said that such short-term policy goals are misguided and that the Fed’s central aim is to fight inflation.

His comments, made during a speech in Moscow, triggered a surge in the dollar in foreign currency markets, because they suggested that the Fed is in no hurry to reduce interest rates.

Higher interest rates slow the economy, hurting most businesses, and make such fixed-income investments as bonds more attractive in relation to stocks.

Early Bond Activity

Bond prices were mixed in early trading today as the domestic market reopened after the Columbus Day holiday.

The price of the Treasury’s benchmark 30-year bond was unchanged around midday. Its yield was 7.99%, compared to 8.01% late Friday.

The U.S. market for Treasury bills, notes and bonds was closed Monday, as were many banks. In Europe, prices of Treasury issues were slightly higher Monday.

William Sullivan, director of money market research at Dean Witter Reynolds Inc., said that there was little news moving the credit markets but that some traders were cashing in profits after a run-up in prices last week, sending the long bond lower.

Sullivan also said that comments by Federal Reserve Chairman Alan Greenspan in Moscow were generating some interest but no significant activity.

Secondary Market

In the secondary market for Treasury bonds, prices of short-term governments were down 1/32 point to up 1/32 point, intermediate maturities were unchanged to down 3/32 point and long-term issues were mostly unchanged, according to the Telerate Inc. financial information service.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on outstanding Treasury issues with maturities of a year or longer, was up 2.25 to 1,187.46.

In corporate trading, industrials were up. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, was up 0.84 to 334.42 from Monday. The corporate bond market was open for trading on Columbus Day.