New Economic Reports Send Dow Down 16.18

NEW YORK —  Stock prices retreated in sluggish trading Tuesday amid uneasiness about the economy’s weakness and pessimism about the chances for lower interest rates.

The Dow Jones index of 30 industrials fell 16.18 to 2,610.25.

Losing issues outnumbered gaining ones by about 4 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 639 up, 831 down and 498 unchanged.

Big Board volume totaled 143.17 million shares, little different from Monday’s total of 140.75 million.

Several new reports underscored the economic slowdown, particularly in the manufacturing sector.

But the statistics didn’t convey a completely clear picture, because they were influenced by special circumstances, analysts said.

A slumping automobile market helped drive down retail sales by a full percentage point in October, the Commerce Department reported.

Industrial production was crimped during the month by a strike in the aircraft industry and the impact of the Bay Area Quake. The decline of 0.7% was the steepest in three years.

Traders have been hoping that the Federal Reserve Board would spur growth by loosening its credit policy to a significant degree. So far, the central bank hasn’t made any dramatic moves.

Stocks of the Big Three auto makers sagged after the industry reported unexpected poor sales. Sales of domestically made cars and light trucks skidded 20.2% in early November, compared to a year ago.

General Motors fell 3/4 to 43 3/8, Ford dropped 1/2 to 44 3/8 and Chrysler was off 1/8 to 20 1/8.

Among heavily traded blue chips, food and tobacco company Philip Morris lost 1 3/8 to 40 7/8 on word that Sen. Edward M. Kennedy (D-Mass.) plans to introduce a bill to bolster cigarette health warnings and sale restrictions.

Combustion Engineering led the Big Board’s list of actively traded issues. It declined 3/8 to 38 5/8 as nearly 3.9 million shares changed hands.

Elsewhere among the actives, Merck pulled back 1/2 to 75 5/8, adding to Monday’s loss of 3 7/8, which came on news that heavy research and sales costs would hurt earnings growth.

The key Nikkei 225-share index gained slightly, bringing Tokyo stocks to a second straight record closing high, but prices suffered from inertia and stayed in a narrow range. The index firmed 18.52 to a closing high of 35,768.64.

London stocks closed firmer in quiet trading. The Financial Times 100-share index closed up 1.5 at 2,214.7.

Credit

Bond prices finished mixed, showing little reaction to the two government reports on the economy and an important Treasury auction.

Short-term government bonds posted modest gains, while longer-term issues were unchanged to slightly lower.

In the secondary market, the Treasury’s closely watched 30-year bond was unchanged from late Monday, with its yield holding at 7.88%.

In the final phase of the governments quarterly refunding, yields on 30-year Treasury bonds fell in Tuesday’s auction to the lowest level in nearly three years. The average yield was 7.87%, down from 8.14% at the last auction Aug. 10.

In addition to Tuesday’s bond auction, the refunding involved sales of $10 billion of three-year notes last Thursday, $10 billion of 36-day cash management bills last Friday and $10 billion of 10-year notes on Monday.

“The auction was very good,” said Douglas Schindewolf, a money market economist at Smith Barney, Harris Upham & Co. “Surprisingly, it didn’t have a big impact. (The market) just seemed to be able to hold its own.”

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.438%, up from 8.375% late Monday.

Currency

The dollar fell sharply against all key currencies while the West German mark continued to take center stage in foreign exchange.

Gold prices, meanwhile, gained ground.

On the Commodity Exchange in New York, gold bullion for current delivery settled at $393.30 an ounce, up $2.30 from late Monday. Republic National Bank of New York quoted a late bid of $392.50, $2.40 higher.

Currency dealers said the continued signs of an economic slowdown in the United States helped depress the dollar by renewing speculation that the Federal Reserve would lower interest rates. A reduction in interest rates could hurt the dollar’s value.

Dealers, however, said that attention in the marketplace was again concentrated on cross trading as the mark continued to climb. They said the flood of East Germans into West Germany has raised the possibility of higher inflation in West Germany and higher interest rates there.

The dollar fell to 1.8540 marks from 1.8615 in London and to 1.8350 marks from 1.8615 in New York.

In Tokyo, the dollar closed up 0.25 Japanese yen to 143.80 yen. It traded at 144 yen in London and at 143.05 yen in New York, down from 143.925.

The dollar was also weaker against the British pound. Sterling bought $1.5810 in London, up from $1.5805 late Monday. It traded at $1.5945 in New York, up from $1.5820.

Commodities

Prices of platinum futures climbed to six-month highs on the New York Mercantile Exchange, extending a rally that has lifted the metal’s value by more than 6% since Nov. 3.

“It’s been incredible,” said Nina Lipton, research director for Platinum Guild International, a platinum trade association.

On other futures markets, gold and silver also advanced; cocoa futures plunged; energy, livestock and meat futures were lower, and grains and soybeans were mixed.

Platinum futures settled $11.30 to $13.10 higher, with the contract for delivery in January at $525.70 an ounce, the highest price for a near-month contract since May 15.

Platinum, like gold and silver, has risen sharply in value since Oct. 13, when a 190-point plunge in the Dow Jones industrial index sent nervous investors scrambling for the perceived safety of precious metals. January platinum settled at $491.60 on Oct. 13.

Cocoa futures plunged to new 14-year lows on New York’s Coffee, Sugar & Cocoa Exchange on continued selling stemming from indications of greater availability of African-origin cocoa.

Cocoa settled $13 to $40 lower, with December at $941 per metric ton.

Oil futures prices fell on the New York Mercantile Exchange, primarily because of large supplies of gasoline in New York harbor.

West Texas Intermediate crude oil settled 9 cents lower to 1 cent higher, with December at $19.50 a barrel; heating oil was unchanged to 0.31 cent lower, with December at 57.45 cents a gallon; unleaded gasoline was 0.75 cent lower to 0.15 cent higher, with December at 50.31 cents a gallon.