8-Day Winning Streak Ends as Dow Falls 14.99

NEW YORK —  Stock prices stumbled sharply Monday, the retreat led by blue chips amid fears of escalating violence in the Middle East. It broke Wall Street’s eight-day winning streak.

The Dow Jones average of 30 industrial stocks, which gained more than 160.30 points last month including 86.74 points last week, was down through most of the session and closed off 14.99 at 2,557.08.

Losing issues outpaced gainers by more than 3 to 2 in composite New York Stock Exchange trading. Big Board volume totaled 207.84 million shares, up from Friday’s 181.87 million.

The Middle East crisis also depressed bond prices, with the Treasury’s closely watched 30-year bond falling 1 1/8 points, or about $11.25 per $1,000 in face amount, to its lowest level in more than two months. Its yield, meanwhile, soared to 9.01% from 8.89% Friday.

The last time the 30-year bond pierced the 9% yield level was on May 21.

Stock market analysts said the specter of spreading religious and political violence in the region was seen as a good justification by some investors to cash in the market’s recent record gains.

“We have a market here that had a virtually uninterrupted rise in the last several days. It was due for a correction anyway,” said Jack Solomon, an analyst at Bear Stearns Cos. in New York. “The Persian Gulf affair is the excuse of the profit takers.”

Among actively traded blue-chip issues, IBM dropped 1 3/4 to 159, General Electric lost 5/8 to 58 5/8, Merck lost 1 to 188 and General Motors fell 1 1/8 to 87 3/4.

Oil stocks surged because of the prospect that the Mideast conflict would constrict petroleum exports from that area, one of the world’s most important producers, thereby raising oil prices sharply. Mobil rose 2 3/8 to 54 7/8, Exxon rose 3 3/8 to 97 1/2, Schlumberger rose 1 3/8 to 50 7/8 and Atlantic Richfield rose 2 5/8 to 98 3/8.

The Mideast tension and reported threats of a South African miners strike also helped precious metals stocks. Homestake Mining rose 2 3/8 to 44 5/8, Asa rose 3 to 72 3/4 and Hecla Mining rose 1 1/8 to 23.

In the credit markets, corporate and municipal bond prices fell.

In corporate trading, industrials and utilities were were down 3/4 point in moderate trading, according to the investment firm of Salomon Bros. Inc.

Among tax-exempt municipal bonds, general obligations fell 3/4 point while revenue bonds fell point, Salomon Bros. said.

Yields on three-month Treasury bills were up 5 basis points to 6.04%. Six-month bills fell 3 basis points to 6.13% and one-year bills gained 4 basis points at 6.47%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, traded at 6.75% up from 6.69% Friday.