They said the market may now be relatively oversold, allowing room for a technical rebound later this week.
The composite index fell 5.03 points to 1,917.43, the lowest finish since September 16 when it ended at 1,909.80. It traded between 1,909.71 and 1,924.45.
Volume was thin at 162.85 million shares worth 418.27 million pesos (7.54 million dollars).
Losers led gainers 39 to 22, with 42 stocks unchanged.
The all-shares index fell 3.58 points to 1,168.34 points.
The Philippine peso was at 55.45 to the dollar as of mid-day.
Dealers said the central bank decision to hike rates by a quarter percentage point Thursday has raised concerns that investors would shift to higher yield instruments away from equities.
The monetary tightening is also expected to increase business costs and dissuade companies from expanding, they said.
"The market's worry is that while earnings are good right now, they won't be strong in 2006 if rates go too high while consumer confidence shrinks," said Jose Vistan of AB Capital Securities.
He said political noise has continued to hurt sentiment, with militant groups and the political opposition staging daily street protests calling for the ouster of President Gloria Arroyo.
Philippine Long Distance Telephone was the most actively traded stock, ending down 10 pesos at 1,645. Security Bank fell 50 centavos to 29.50 pesos while Banco de Oro Universal Bank retreated one peso to 30.
Petron Corp fell. 10 centavos to 3.25 pesos. San Miguel Corp saw its A and B shares unchanged at 65 and 92 pesos respectively.