Stocks closed sharply lower in moderate trading Friday, depressed from the opening by news of an unexpectedly big jump in producer prices last month.
The Dow Jones industrial average, which lost 7.92 Thursday, fell 20.55 to close at 2593.81.Among broader market gauges, the New York Stock Exchange composite index slid 1.35 to 178.71 and Standard & Poor's 500-stock index lost 2. 52 to 326.82. The price of an average share fell 23 cents.
Declines pounded advances 1,009-502 among the 2,006 issues crossing the NYSE tape. Big Board volume totaled 150,880,000 shares, down from 162,110,000 traded Thursday.
Stocks opened lower on the Labor Department's announcement that inflation at the producer level rose 0.5 percent in November after posting three consecutive advances of more than 1 percent. Economists had expected prices to rise 0.1 percent.
The unexpectedly big jump in prices made investors jittery about whether the Federal Reserve would still be able lower interest rates to help pump up the faltering economy.
Analysts said program selling, used to profit on price differences between stocks and stock-index futures, then exacerbated the declines.
Jitters about efforts to negotiate an end to the Mideast crisis also dampened sentiment, analysts said.
President Bush refused to budge Friday on dates he proposed for direct U.S.-Iraqi peace talks, saying he will not be party to "Saddam Hussein's manipulation" to get around a Jan. 15 deadline to get out of Kuwait.
"Producer prices were up more than expected, and the `peace news' deteriorated," said Alfred Goldman, market strategist at A.G. Edwards & Sons Inc. in St. Louis. "So a market which recently tried to restart a rally and was fragile at best just couldn't stand up under the weight of those negatives.
"On the other hand, it bent but did not break," he pointed out.
On the trading floor, General Motors was the most active issue, down 1 to 331/4. Sales reported Thursday for the first 10 days of December were up from year-ago levels, but figures for the same period in 1989 were weak.
Philip Morris followed, down 5/8 to 505/8.
AT&T was third, down 3/8 to 305/8 in active trading. NCR rejected its $90-a-share hostile bid at a board meeting Thursday and said Friday it is not in any merger talks with any company.
NCR, which fell 11/4 to 887/8 in active trading, also filed suit against AT&T, charging filings relating to AT&T's tender offer were false and misleading. For its part, AT&T said it was determined to conclude a merger with NCR but that it would prefer a negotiated accord.
Motorola was also active, down 5/8 to 497/8. GTE chose AT&T over Motorola Thursday for a cellular communications equipment contract.
And Castle & Cooke was heavily traded, plunging 45/8 to 29. The company, which announced earlier this year that it might sell subsidiary Dole Food Co., said Thursday that it has taken the food giant off the block because of a slack market for acquisitions. Analysts believed it could have brought as much as $2.5 billion.
Volume of NYSE-listed issues, including trades in stocks on regional exchanges and in the over-the-counter market, totaled 182,574,300 shares, compared with 197,246,580 traded in the previous session.