Stocks Retreat; Dow Off 37.13, Most in 2 Months

NEW YORK — Stocks fell to their sharpest losses in nearly two months today as worries over the weak economy overshadowed falling interest rates and oil prices.

The Dow Jones industrial average slid 37.13 points to end at 2,573.51. In the broader market, three stocks fell for every two that rose, on moderate New York Stock Exchange volume of 141.45 million shares.

The drop in the Dow was the biggest since Nov. 7, when the 30-share index lost 44.31 to close at 2,440.84.

Analysts said many traders were sitting tight awaiting developments in the Middle East.

The market also has had to contend of late with an abundance of evidence that economic activity has been weakening rapidly since last fall.

More of the same is expected Friday when the Labor Department reports on the employment situation for December.

Interest rates have been falling of late as signs of recession have accumulated. But stock-market investors appear to have focused their attention instead on uncertainties about the outlook for economic growth and corporate profits.

The Limited rose 1/2 to 18 7/8 as the most active NYSE issue an hour before the close. The company reported a 19% sales increase for the four-week Christmas holiday period through Dec. 9.

Energy stocks were broadly lower as the price of oil declined for a second straight day. Chevron dropped 1 to 71 3/8; Atlantic Richfield 2 to 120 5/8; Texaco 1 1/8 to 58 1/2, and Amoco 3/4 to 50 7/8.

Bond prices rose moderately in light trading early today on news of a rise in jobless claims and hopes for lower interest rates.

The Treasury’s bellwether 30-year bond rose 1/4 point, or $2.50 per $1,000 in face amount, around midday.