Poor economic reports and renewed worries about the Persian Gulf sent the stock market into a broad retreat Friday.
The Dow Jones average of 30 industrials dropped 20.55 to 2,593.81, closing out the week with a net gain of 3.71 points.
Standard & Poor's 500-stock composite index was down 2.52 at 326.82.
As measured by Wilshire Associates' index of more than 5,000 actively traded stocks, the market lost $22.84 billion, or 0.74 percent, in value.
Declining issues outnumbered advances by about 2 to 1 on the New York Stock Exchange, with 526 up, 1,025 down and 473 unchanged.
Volume on the floor of the Big Board came to 150.88 million shares, down from 162.11 million in the previous session. Consolidated NYSE volume totaled 182.58 million shares.
"It's a sagging market based on sagging hopes for peace and sagging prospects for lower interest rates in the immediate term," said Alan Ackerman, market strategist at Reich & Co. Key factors in the slide were two poor economic reports released Friday.
The Federal Reserve said that factory production in November tumbled 1.7 percent, its sharpest decline since January 1982, while the Labor Department said that wholesale inflation rose an unexpectedly strong 0.5 percent.
"That was a double dose of deadly news," said Allen Sinai, chief economist and stock analyst at Boston Co.
Investors were particularly concerned that the bad inflation figures would stop the Federal Reserve from lowering interest rates.
Stocks also were hit by comments from two Republican senators that President Bush was frustrated with the failure to arrange peace talks with Iraqi leader Saddam Hussein and was prepared to give up the initiative. Later, Bush accused Saddam of stalling the U.S. effort to arrange peace talks.
"I think the bottom line is once again it suggests that a peaceful resolution, at this point, is not a certainty," said Brad Turner, chairman of the investment policy committee at McDonald & Co.
General Motors dropped 1 to 33 1/4 as the most active NYSE issue, and Ford Motor was down 1/2 at 25 1/4 . Chrysler was unchanged at 12 1/4 despite news that Kirk Kerkorian had accumulated more than 9 percent of its stock.
Castle & Cooke fell 4 5/8 to 29. The company decided against selling any part of its Dole Food Co. operation.
NCR fell 1 1/4 to 88 7/8 . The company's board rejected AT&T's $90-a-share tender offer. AT&T rose 3/8 to 30 5/8 .
Gerber shares fell 4 1/4 to 56 on a Morgan Stanley report that the sales of its baby food should remain flat for the second half of the fiscal year.
Medtronic shares fell 5 1/4 to 84 3/4 . The company temporarily suspended test implants of a new heart device.
Syntex slipped 2 3/4 to 57 5/8 on investor disappointment with a recommendation by an advisory panel of the Food and Drug Administration.
Motorola fell 5/8 to 49 7/8 . Goldman Sachs trimmed its 1991 per share earnings estimate, citing GTE Corp.'s decision to award AT&T a $600 million contract over Motorola.
IBM fell 1 5/8 to 111 1/4 .
At the American Stock Exchange, the market value index closed at 305.74, down 0.97.
The NASDAQ composite index for the over-the-counter market dropped 2.67 to 368.83. Among OTC stocks, Ashton-Tate dropped 1 3/8 to 6 1/4 after losing copyright protection on its key dBASE products.
On the bond market, the Treasury's bellwether 30-year bond closed down 25-32 point, or $7.81 per $1,000 in face amount. Its yield was up to 8.18 percent from 8.12 percent late Thursday.
Short-term maturities were down 1-16 point to 1/4 point, intermediate maturities fell 5-16 point to 15-32 point and long-term issues lost 7-16 point to 25-32 point, Telerate Inc. reported.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 7-32 point to 91 3/4 . The average yield to maturity was up to 7.47 percent from 7.45 percent late Thursday.