Stocks, Bonds Mixed Ahead of Price Data

Stocks and bonds closed Thursday’s session on a mixed note after trading narrowly in anticipation of May wholesale price data due out today.

But the dollar fell against major currencies amid heightened tensions between the United States and North Korea.

After trading in a 15-point range all day, the Dow Jones average rose 3.69 to 3,753.14.

In the broader market, declining issues narrowly led advancers by 1,081 to 986 on the New York Stock Exchange, where Big Board volume totaled 252.94 million shares, down from Wednesday’s 256.01 million.

Bonds also traded in a narrow range as the market moved cautiously ahead of today’s report. The key main 30-year bond yield fell to 7.27% from 7.28% on Wednesday, while its price, which moves in the opposite direction, finished up 1/16 point, or 63 cents per $1,000 in face value. Short-term Treasuries fell 1/32 point, and intermediate maturities were unchanged to down 1/32, the Telerate Inc. financial information service reported.

Analysts expect the May producer price index to reflect a rise of 0.2 percentage points, or a rise of 0.3 percentage points when volatile food and energy prices are excluded.

If the figures come in much higher than expected, meaning that prices are rising too fast, that could signal that inflation is a problem and “wallop stocks and bonds,” said Steven Goldman, chief market strategist at Weeden & Co.

But the stock market won’t get much of a boost if the number is unexpectedly low, Goldman said. A big drop in Nasdaq stocks this week has put a “slight bias to the downside” in the market, he said. The Nasdaq composite index of mostly smaller issues fell 0.91 to 728.88.

Stocks did not get much direction from bonds.

Among the market highlights:

Food, beverage and restaurant stocks fell sharply after PepsiCo said its second-quarter earnings will be about even with last year’s $427 million, or 53 cents per share, after taxes. Analysts were looking for a profit increase of about 15% for the April-June period.

* Pepsi dropped as much as 4 5/8 before recovering part of those losses, ending the session down 3 at 31 1/2. Other food and restaurant chains fell sharply. Coca-Cola fell 1 to 40 5/8. In a move to reassure investors, Coca Cola reiterated earlier statements that its full-year earnings per share will grow “in the upper teens to 20%.” McDonald’s fell 1 3/4 to 60 1/8.

* Snapple Beverage fell 2 to 24 after the Wall Street Journal said the company is suffering under competition from Lipton iced teas.

Pharmaceutical stocks rose after Cowen & Co. upgraded several issues.

* Merck rose 1 to 31 3/4; Bristol-Myers Squibb rose 7/8 to 55 5/8; Eli Lilly advanced 2 to 57; Schering-Plough added 1/2 to 65 1/8; Mylan Labs climbed 3/8 to 21 3/8; Pfizer rose 1 1/8 to 63 3/8.

* Computer stocks, which pulled Nasdaq issues lower on Wednesday, were stable. IBM rose 3/8 to 62, while Apple advanced 7/8 to 27.

* Electronics company Varian Associates gained 1 1/8 to 33 1/2. Paine Webber upgraded the stock to “attractive” from “neutral,” citing strong earnings.

Foreign markets were mixed. Stocks posted wholesome gains in Tokyo for the third straight day. The Nikkei 225-share average ended up 140.83 points at 21,402.78.

In Frankfurt, the DAX 30-share average ended 15.88 points lower at 2,129.32, while London’s Financial Times 100-share average fell 9.30 points to 3028.90.

Mexico’s Bolsa index rose 3.38 points to close at 2,413.36.

In the currency market, the dollar rose in European trading. However, it closed unchanged at 103.95 Japanese yen in New York and at 1.669 German marks, down from 1.670 marks.

Meantime, gold prices advanced on the New York Comex to $383.10 an ounce, up $1.40.

Market Roundup, D6