Blue-chip stocks closed with a small loss for the second straight day Wednesday, burdened by a wave of selling in stocks considered vulnerable to an economic slowdown.
The Dow Jones industrial average edged 2.02 points lower to close at 3,935.37, posting a single-digit loss for the second consecutive session after five days of gains. The blue-chip index hovered close to unchanged all day.
The broader market indexes outperformed the blue chips. A rally in semiconductor stocks and takeover speculation swirling around biotechnology company Amgen Inc. lifted the Nasdaq composite index by 4.80 points to 783.77.
The Standard & Poor's 500 list breached its all-time high of 482.00, made Feb. 2, 1994, before settling back to close at 481.19, up 0.38 point for the day. The NYSE's composite index rose 0.03 point to 261.67. At the American Stock Exchange, the market value index advanced 2.80 points to 445.94.
On the New York Stock Exchange, advancing issues led decliners 11 to 10. Big Board volume was a moderate 320.24 million shares, up from Tuesday's 315.19 million.
Analysts noted that the market was cautious ahead of Friday's producer price index figures for January, which could bolster or shatter Wall Street's newfound confidence that the economy is slowing.
Stocks had rallied for five sessions, through Monday, as investors grew more convinced that the economy was slowing enough to bring the Federal Reserve Board's interest rate hikes to a halt.
As investors have taken this view, they've been selling economically sensitive cyclical stocks.
"The Dow's not doing much, primarily due to the economically sensitives," said Timothy Straus, manager of institutional sales at Hancock Institutional Services.
In the bond market, Treasury bond yields finished mixed following a lukewarm response to an auction of new 10-year notes that indicated investors are mixed about the direction of the economy.
The key 30-year bond closed marginally higher at 7.65%. It closed at 7.64% on Tuesday. Its price, which moves in the opposite direction, finished down 3/32 point, or 94 cents per $1,000 in face value.
Short- and medium-term securities were unchanged to slightly higher.
The long bond was pressured by market participants trying to make room for today's auction of $11 billion in 30-year bonds, analysts said. But the response to Wednesday's auction may signal trouble for that offering.
The currency market had had little reaction to the Treasury auction as the dollar slipped against the Japanese yen and the German mark, as volatile trading in non-U.S. currencies buffeted an otherwise featureless foreign exchange market.
The greenback closed in New York at 98.95 Japanese yen, down from 99.46 on Tuesday. It also closed at 1.531 German marks, down from 1.536.
Among Wednesday's highlights:
The Dow 30 components were led lower by economically sensitive issues, including Alcoa, which fell 1 3/4 to 78 1/4, and General Tire, which lost 1 to 35 7/8. But consumer stocks Eastman Kodak rose 1 1/8 to 50 3/4, and Disney climbed 1 1/8 to 53 1/4.
* Aluminum producers were hit by a sharp drop in prices, reflecting concern over a global economic slowdown. Alcan Aluminum shed 3/8 to 24 3/4 and Alumax dropped 5/8 to 26.
* A "buy" signal on semiconductor stocks came after Merrill Lynch named Intel Corp. its "Focus One" stock of the week. Intel rose 3 5/8 to 76 5/8, Micron Technology jumped 2 5/8 to 47 7/8 and Cirrus Logic added 1 7/8 to 32 7/8.
* A PaineWebber analyst upgraded Texas Instruments to "buy" from "attractive," and the company's stock rose 1 3/4 to 75.
* Amgen ended up 5 3/8 to 70 3/4 after soaring to 76 1/8 earlier in the day on renewed market rumors that it could be a takeover target of Bristol-Myers Squibb, whose stock fell 1 to 60 7/8.
Amgen declined to comment on the rumors. Bristol-Myers could not be immediately reached.
Other biotech issues rose as well, with Biogen up 1 1/4 to 39 3/4 and Genzyme up 1 3/8 to 39 7/8.
* Quantum Health Resources sank 4 7/16 to 26 3/16 after it canceled a scheduled meeting with analysts at a Smith Barney health care conference. Quantum denied market rumors that its chief executive was hospitalized and said the cancellation was due to "business reasons."
* Auto stocks fell, with General Motors losing 5/8 to 38 3/4.
Overseas, stocks closed lower. In Tokyo, the 225-issue Nikkei average fell 210.30 points to close at 18,290,25. In Europe, Frankfurt's DAX index ended down 4.87 points at 2,087.62, while London's FTSE-100 average closed at 3,072.5, off 0.2 point.
Market Roundup, D6
30-year T-Bond: 7.65%
1-year T-Bill: 6.70%