Investor perceptions that stocks are becoming too expensive helped send prices plunging Friday, putting a down note on a historic week in which the Dow Jones average closed above 3,000 for the first time.
The Dow average of 30 industrials fell 33.67 to 2,965.59.Declining issues outnumbered advances by a ratio of about 7-to-4 in nationwide trading of New York Stock Exchange-listed stocks, with 1,028 down, 585 up and 464 unchanged.
Volume on the floor of the Big Board came to 195.51 million shares, down from 217.41 million in the previous session.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 236.78 million shares.
Despite Friday's lagging performance, the Dow average still advanced 44.80 points or 1.53 percent for the week. Such an advance, absent a cut in interest rates and little firm evidence of an immediate economic recovery, led market strategists to gripe that stocks are becoming overpriced.
Tim Shea, portfolio strategist for C.J. Lawrence Inc., said "stocks are getting pricey" and another 5 to 7 percent rise in stock prices could "spoil the party."
"Maybe the investors sense here the market does not have more to run unless it gets some help on the (interest) rate side," Shea said.
Lawrence R. Helfand, managing director of Rodman & Renshaw Inc. in Chicago, said his calculations of market valuation against dividend yields and earnings show the market isn't far from its upper range.
"It does suggest caution," Helfand said.
Shea said the concern could be eliminated once the economy clearly is heading back to health.
"If things go to plan and we can get a rebound without inflation, that's a real bullish combination," Shea said.
Also driving down stock prices was widespread profit-taking. Since Jan. 16 - eve of Operation Desert Storm - the Dow average has gained 456.68 points, or 18.2 percent in value. Other barometers of stock performance also have surged.
Steve Puhr, bank analyst for the Detroit-based Roney & Co., said investors who cashed in their winnings made it difficult for the Dow average to sustain Wednesday's record level of 3,004.46. Also contributing to volatility was the expiration of several stock index futures and options, he said.
Some companies' stock fell for reasons other than market trends. Cigarette maker Phillip Morris fell 11/2 to 681/2 following a statement by an independent scientific panel that second-hand smoke should be considered a cancer threat to humans. Gannett Co. gained 7/8 to 433/4 after Goldman Sachs & Co. boosted the newspaper group's investment rating.
Other active issues included Citicorp, down 1/2 at 153/4; American Express, down 11/4 to 28; and Global Marine, up 3/8 at 47/8. Blue chips were depressed as well: Sears Roebuck, down 1/2 to 39; General Electric, down 5/8 to 743/8; and IBM slipped 1/4 to 1091/2.
As measured by Wilshire Associates' index of more than 5,000 actively traded stocks, the market lost $36.26 billion, or 0.98 percent, in value.
The NYSE's composite index of all its listed common stocks fell 2.03 to 210.23.
Standard & Poor's industrial index slid 4.94 to 456.19, and S&P's 500-stock composite index dropped 4.26 to 384.20.
The NASDAQ composite index for the over-the-counter market fell 5.43 to 501.19. At the American Stock Exchange, the market value index closed down 2.57 to 370.83.