NEW YORK, AUG. 26 -- Stock prices slipped from record highs in active trading today as unexpected weakness in IBM prompted investors to take profits.
The Dow Jones industrial average, which closed at a record high Tuesday, fell 20.57 to 2701.85. Two-thirds of the slide occurred as selling accelerated in the last hour of trading.
Though the Dow's fall was sharp, deterioration in the broader market was not as dramatic. Losers outpaced gainers by 9 to 7.
Broad-market indexes fell. The New York Stock Exchange composite index slid 1.05 to 186.94 and Standard & Poor's 500-stock index dropped 2.20 to 334.57. The price of an average share fell 25 cents.
Big Board volume was 196,190,000 shares, compared with 213,480,000 Tuesday.
The market posted gains on the opening, boosted by a firmer dollar and steady bond prices. The opening of trading in IBM's stock was delayed, due to an imbalance of buy and sell orders.
The blue-chip sector relinquished its gains when influential IBM opened more than 3 points below its closing price Tuesday. The computer giant fell more than 2 points Tuesday after Kidder Peabody & Co. analyst William Easterbrook cut his earnings estimates for the company.
On Wednesday, Salomon Brothers analyst Marc Schulman was reported to have lowered his recommendation on IBM to a "hold" from a "buy" and to have cut his 1988 earnings estimates for the company.
"The weakness in IBM gave the market a downward tilt," said Alan Ackerman, senior vice president of Gruntal & Co.
Futures-linked selling reinforced the downward trend in the last hour of trading, traders said.
"The market averages dropped dramatically primarily because of weakness in IBM and Du Pont," said Ernie Rudnet, manager of block trading at Mabon Nugent & Co. "The market is down but not as badly as a 20-point drop in the Dow might indicate."
Rudnet said the market was "a little tired" but he said that today's action extends a pattern of "very orderly profit taking."
On the trading floor, IBM was the most active issue, dropping 4 to 168 after losing 2 3/8 Tuesday.
RJR Nabisco followed, climbing 1 1/2 to 70 3/8. Philip Morris rose 2 1/2 to 122 3/8. The tobacco issues rose after posting gains Tuesday on news that the 1st U.S. Circuit Court of Appeals in Boston ruled plaintiffs cannot challenge the adequacy of federal laws governing health warnings on cigarette packages.
Loews rose 6 1/2 to 87. Salomon Brothers emphasized the stock as the best buy in the tobacco group. American Brands jumped 2 7/8 to 59 1/2.
Castle & Cooke was the third-most active issue, easing 1/4 to 24 7/8.
Allegis jumped 2 5/8 to 98 3/4. Lufthansa said it is interested in buying the company's Hilton Hotel chain.
CBS soared 8 to 205 1/2 after Drexel Burnham Lambert added the stock to its buy list and raised its 1987 and 1988 earnings estimates for the company.
McGraw-Hill fell 1 1/8 to 78 3/8 after climbing 7 Tuesday. Minneapolis investor Irwin Jacobs confirmed he and Carl Pohland, owner of the Minnesota Twins baseball team, have accumulated in large stake in the publisher.