Dow Off 25.60; Worst Week in 3 Months

NEW YORK — The stock market closed out its worst week in more than three months with another broad decline in quiet trading Friday.

A drop in the dollar and a sharply lower close in the Tokyo market offset some seemingly favorable news on inflation, and a modest decline in interest rates failed to stir the market out of its recent slump.

The Dow Jones index of 30 industrials fell 25.60 to 2,060.99, stretching its loss for the week to 68.46 points.

That marked the biggest weekly decline for the Dow since it dropped 76.26 points April 11-15.

“The market hasn’t been able to sustain a rally, especially after it broke support at 2,070,” said Rodd Anderson, vice president of equities trading at Shearson Lehman Hutton Inc.

Volume on the floor of the New York Stock Exchange had been thin all week, with 148.88 million shares being traded Friday, against 149.46 million on Thursday.

Declining issues outnumbered advances by more than 5 to 2 in NYSE trading.

The Labor Department early in the day reported that the consumer price index gained 0.3% in June, below the market’s expectations of a rise between 0.4% and 0.5%.

“The CPI was a good number, but the market has such a negative bias that you’d need a much better number than that,” one trader said.

Tokyo Market Skids

Stock analysts said the market’s inability to take heart from positive news, higher U.S. bond prices and good second-quarter corporate earnings suggests that Wall Street’s traditional summer rally has stalled for the time being.

Part of the trouble is taking place in Tokyo, where share prices have fluctuated wildly this week. After losing more than 700 points in the Nikkei 225-share index on Monday and Tuesday, the Japanese market staged a remarkable two-day recovery. But it lost another 390 points to close at 27,285.01 on Friday.

In addition, the dollar, which had risen to 11-month highs against the West German mark last week, fell again Friday as traders gave in to the will of the central banks. The dollar, which was quoted above 1.89 marks on Monday, finished down at 1.8275 marks.

Forecasts that the currency will slip further next week undermined Wall Street stocks because a falling dollar tends to discourage investors from U.S. assets.

“It was dull and down all day,” George Pirrone, a senior trader at Dreyfus Corp., said of the New York market. “It was the Japanese market, and the fear of rising interest rates. The technology sector also did us in.”

Just before mid-session, brokers said prices of big-name issues weakened when professionals engaged in computer program trading sold those stocks as part of multiple strategies involving stock index futures.

Technology Issues Fall

Technology issues, which have been hit hard by some disappointing earnings reports in recent sessions, continued to slump.

Control Data lost 1 5/8 to 22. The company announced plans to close five plants for a week in August, citing disappointing computer sales.

Tandem Computers dropped 7/8 to 13 3/4 on top of a 2 3/4-point slide Thursday, when the company posted lower quarterly profits.

Digital Equipment fell 1 3/8 to 103, Hewlett-Packard dropped 1 1/8 to 49 5/8, International Business Machines lost 1 5/8 to 120 1/8 and Ashton-Tate edged down 1/2 to 22 in the over-the-counter market.

Besides IBM, contributors to the Dow’s decline included Philip Morris, down 1 1/2 at 88; General Electric, down 3/4 at 41; Du Pont, down 2 1/2 at 85 1/2, and Eastman Kodak, down 3/8 at 42.

Polaroid, subject of a $40-a-share takeover bid by Shamrock Holdings, rose 7/8 to 40 3/4 on speculation that another suitor might appear.

Technical Tape, traded on the American Stock Exchange, jumped 3 to 13 1/2. The company agreed to a $13.75-a-share takeover by Dainippon Ink & Chemicals.

The Wilshire index of 5,000 equities closed at 2,641.950, down 26.529 close.

The NYSE’s composite index of all its listed common stocks dropped 1.35 to 149.55.

Standard & Poor’s industrial index fell 3.64 to 304.36, and S&P;’s 500-stock composite index was down 3.16 at 263.50.

The NASDAQ composite index for the over-the-counter market dropped 1.51 to 387.35. At the American Stock Exchange, the market-value index closed at 306.11, down 2.097

Prices also fell sharply on the London Stock Exchange, finishing at the day’s lows amid concerns about the British pound’s strength and a decline in prices in the U.S. stock market.

The Financial Times 100-share index fell 19.6 points to close at 1,844.8, the day’s low.