NEW YORK, JUNE 25 -- The Dow Jones industrial average dipped 12 points today after an early rally faded in the face of sharp drops in share prices on the Japanese stock market and losses on the U.S. bond market.
The Dow has fallen 56 points in the last two sessions, and has now slumped 90 points below its record-high close of 2935 on June 15.
The 30-year Treasury bond, off only slightly as stocks opened, extended losses to half a point by midday and nearly a full point by the time the stock market closed. "Interest rates will be the key to the market over the short term," said technical analyst Gail Dudack at S.G. Warburg. Dudack noted that the Dow utility index slumped more than a full point today -- a bad omen for the longer-term interest rate picture. The 30-year Treasury bond posted a yield as high as 8.568 percent, its highest level in more than three weeks.
Traders also were influenced by a sharp drop in Japanese stocks overnight. Tokyo's Nikkei-225 index tumbled 570 points to 31,124 amid a falling yen, undermined by domestic political concerns.
Also dampening enthusiasm was an announcement by Caterpillar Inc. that it expects disappointing earnings for 1990. The stock opened down 2 1/8 at 61 3/8 and more than doubled its initial loss by the close.
At the close, the Dow stood at 2845.05, down 12.13, while declining issues outpaced advancing ones by a ratio of more than 2 to 1. Among Dow components, Philip Morris finished up 1 7/8 at 46 5/8 on carry-over buying related to Friday's announcement that it will purchase controlling interest in Jacobs Suchard, the Swiss coffee and chocolates specialist.
The Dow transports lost a hefty 16.42 points to close at 1147.81, while the utilities slumped 1.32 to 206.87. Among broad stock indexes, the Standard & Poor's 500 was down 3.12 at 352.31, the NYSE Composite down 1.64 at 192.60, the Value Line down 2.05 at 282.98, the Amex Market Value down 1.89 to 357.39 and the Nasdaq Composite down 3.69 to 455.64.