NEW YORK, JUNE 30 -- The stock market suffered its worst loss in six weeks today as profit-taking became the dominant trend after prices were unable to recover from a midday setback triggered by news of a fire or explosion at the U.S. Embassy in Kuwait.
The Dow Jones average of 30 industrials, which rose 10.05 Monday, dropped 28.38 to 2418.53, losing 1.16 percent of its value.
Broad-market indexes also retreated. The New York Stock Exchange composite index dropped 1.92 to 171.07. Standard & Poor's 500-stock index plunged 3.90 to 304.00 The price of an average share fell 46 cents.
Declines led advances 988 to 603 among the 1,979 issues crossing the NYSE tape.
On the Big Board, about 165.5 million shares changed hands, compared with 142.5 million Monday.
During most of the morning, the market was narrowly mixed in calm trading as money managers made quarter-end portfolio adjustments. But stocks slid suddenly at midday as news circulated that a fire or explosion, which officials called "accidental," had occurred at the U.S. Embassy in Kuwait.
The reports sent bonds and stock index futures prices tumbling. The retreat in the stock index futures market triggered equity sell programs.
The 30-year bellwether Treasury bond, up modestly midmorning, erased its gain and fell another half point, before trimming its losses in late trading.
On New York's Commodity Exchange, gold settled at $449.40 an ounce, up $2.80 on the day.
Futures-related selling continued to constrain equity prices as the afternoon wore on, said Jack Baker, head of equity block trading at Shearson Lehman Bros. Inc.
Baker and other traders said profit-taking in light volume could mark the rest of the week's trading, which ends a day early because of the Fourth of July holiday weekend.
On the Big Board, Santa Fe-Southern Pacific was the most active NYSE-listed issue, rising 4 1/8 to 50 3/8. The company said it plans asset sales.
Kansas City Southern Industries said it will make a formal offer to Santa Fe-Southern to buy Southern Pacific Transportation Co. for cash. Kansas City Southern rose 1 3/4 to 58 3/4.
Burlington Northern, which said it was interested in buying portions of Santa Fe-Southern's railroad units, climbed 5 to 82 3/4.
Varity was the second-most active issue, easing 1/8 to 2.
AT&T was third, losing 1/2 to 27 5/8. Among other blue chips, International Business Machines fell 2 7/8 to 162 7/8, General Electric dropped 1 5/8 to 54 3/8, American Express lost 1 1/8 to 34 1/4 and Union Carbide fell 1 1/4 to 29 5/8.
General Motors slipped 1 1/4 to 82 5/8. GM said it would indefinitely lay off 3,000 Detroit workers.
Nationwide turnover in NYSE-listed issues, including trades in stocks on regional exchanges and in the over-the-counter market, totaled 193.25 million , compared with 168 million Monday