NEW YORK, AUG. 30 -- The Dow Jones industrial average fell 39 points as the bond market slumped on rebounding oil prices and computer-program sellers took the stock market's helm. The Dow was off 49 points just before a rebound into the final bell.
While crude-oil prices did not rise dramatically today -- October crude futures settled up 85 cents per barrel at $26.77 -- they did convince the financial markets that Wednesday's nearly $2 drop might be short-lived. The market was also ambivalent about prospects for a settlement in the Middle East, traders said.
Stocks received no support from the bond market, which remained weak all day despite speculation that an overnight rise in the Bank of Japan's discount rate, by 0.75 percentage point to a full 6 percent, could send a signal to the U.S. Federal Reserve that the Middle East crisis had settled down enough to make monetary decisions without unduly riling the financial markets.
Bullish investors have hoped for an ease in the federal funds rate by at least 0.25 point to 7.75 percent in order to counterbalance the economic depressant of sharply higher oil prices in August. But the 30-year Treasury bond was off 19/32 after tumbling almost a full point by midday as traders remained skeptical of a Fed move.
At the close, the Dow stood at 2593.32, down 39.11, while declines outpaced advances -- for the first time in four sessions -- by a respectable margin of about 2 to 1. New York Stock Exchange volume, which by midday was running only slightly ahead of Wednesday's pace, fell off in late trading. Volume on the day contracted to a light 120 million shares.
Firming oil prices overseas counterbalanced any buoyant effect that sizable advances in Japanese and British stocks might have had on New York trading. London's FTSE-100 was up 35 points at 2160 as New York opened, and Tokyo's volatile Nikkei-225 index had rebounded 775 points to 25,669 as giant Nomura Securities announced that a market bottom had been reached and backed up its pronouncement with heavy buying.
Some traders said that except for Monday's sharp rally of 78 Dow points, the market had not been particularly impressed by recent media analyses comparing stock action in the current Middle East crisis to action at the beginning of other U.S. military actions, such as the Korean War, when sharp sell-offs at the outbreak of hostilities actually provided investors with excellent entry points.
Among stocks in the Dow average, Merck fell 2 to 80, IBM lost 2 1/8 to 101 3/4, Procter & Gamble slipped 1 5/8 to 76 1/4, General Motors gave up 1 3/8 to 39 1/4, and full-point losses were recorded for AT&T, Coca-Cola, Philip Morris and Minnesota Mining. All three oil issues also lost ground despite rebounding crude-oil prices. Chevron lost 1 1/2 to 75 1/4, Texaco dipped 1 1/8 to 62 1/8 and Exxon surrendered 1 to 48 7/8.
Among industry groups, oil stocks were broadly lower, but only a few posted conspicuous losses. Atlantic Richfield was off 2 1/4 at 133 1/2, Royal Dutch dropped 1 7/8 to 79 1/4 and Amoco slipped 1 3/8 to 54.
Among groups that had prospered on Tuesday and Wednesday trading was narrowly mixed, although Upjohn and American Home Products lost full points among the drugs, and Kellogg, Heinz, Campbell and Borden dipped at least a point among the food processors.
The Dow transports fell 9.88 to close at 901.26, while the utilities lost 1.88 to 193.73.