Stocks Mixed, Bonds Steady as Cautious Mood Prevails

The Dow Jones industrial average rose Wednesday, but most stocks slid again as bonds were unchanged and investors remained cautious about inflation.

The Federal Reserve Board’s comment in its “beige book” report that the economy showed moderate growth in May and early June helped lessen fears of an interest rate hike at next month’s meeting of the Federal Open Market Committee, analysts said. The yield of the Treasury’s main 30-year bond was unchanged at 7.10%.

The Dow industrials advanced 20.32 points to 5,648.35. But that was down from a midday gain of 46 points, when the Dow briefly broke free of the narrow, indecisive trading range that has characterized this week and last.

“A lot of people are just pulling to the sidelines and don’t want to play,” said Larry Rice, chief investment officer at Josephthal, Lyon & Ross. “Until bond yields fall below 7%, I don’t see how stocks can make any meaningful advance.”

Declining issues outnumbered advancers by about 7 to 5 on the New York Stock Exchange, where volume totaled 375.29 million shares, making it the sixth straight session below 400 million, underlining the cautious tone in the market.

The Standard & Poor’s 500-stock index fell 0.10 point to 661.96, the eighth-straight decline for that blue-chip measure. The American Stock Exchange’s market value index fell 0.06 point to 588.93, its seventh straight decline.

Technology stocks stabilized after Tuesday’s slide on growing worries about slack demand in the computer industry. That calmed some concerns about a possible sell-off after this spring’s powerful rally in computer-related and smaller-company stocks, which dominate the Nasdaq and American markets.

“We’re in the middle of the silly season with corporate earnings. We don’t know very much, so the market tends to overreact to most news,” said Abby Joseph Cohen, chief market strategist at Goldman Sachs & Co.

“Companies usually don’t pre-announce positive results,” she said. “It’s a mistake to look at a pre-announcements and call them a scientific sample. It’s a sample of companies that may be having troubles.”

The technology-laden Nasdaq composite index, which tumbled nearly 25 points on Tuesday, fell 3.81 points to 1,179.27, but several computer-industry bellwethers rebounded. Intel rose 1 to 71 3/8 and Cisco Systems rose 1/2 to 53 3/8.

Markets may be hesitant ahead of Friday’s triple witching, which will bring the expiration of June index options, index futures and individual equity options.

Among market highlights:

* The bulk of the 30-stock Dow index’s gains came from Boeing, which rose 1 3/4 to 84 3/4, and Procter & Gamble, up 2 1/8 to 89 7/8.

* Shares of the Big Three car makers were mixed after Salomon Bros. raised its second-quarter earnings estimates for them, citing production efficiencies and strong sales. Ford rose 1/2 to 34 7/8, General Motors slipped 1/4 to 55 and Chrysler rose 1/8 to 67 7/8.

* Healthsource lost 2 1/4 to 17 3/4 after its chief financial officer announced his resignation.

* Diana lost 7 1/2 to 68 3/4. The company reiterated its policy of not commenting on its stock activity. Diana fell 4 3/4 Tuesday.

* Sun Microsystems rose 2 to 59 after Morgan Stanley added the stock to its “buy” list. The stock rose 1 1/8 Tuesday despite overall weakness in technology stocks after Goldman Sachs upgraded the stock to its “priority” list.

Overseas, Tokyo’s Nikkei stock average rose 0.2%, Frankfurt’s DAX index rose 0.2%, and London’s FTSE-100 fell 0.1%.

The dollar climbed against the mark Wednesday amid hopes that interest rates in Germany are headed lower, but fears that Japan will eventually raise interest rates limited gains against the yen.

In late trading, the dollar rose to 1.5216 German marks from 1.5124 on Tuesday, while edging up to 107.96 yen from 107.79. The mark slid to 70.93 yen from 71.27 on Tuesday.

Market Roundup, D6