The stock market closed mixed Wednesday, with blue chips and interest-rate-sensitive stocks taking a hit as bond yields jumped.
Comments by Federal Reserve Board Chairman Alan Greenspan, who suggested that the economy's slowdown isn't worrisome, caused some traders to bail out of bonds on fears that the central bank has no plans to cut interest rates soon.
As bond yields rebounded, the Dow Jones industrial average fell 23.17 points to 4,462.03.
In the broader market, losers topped winners by about 3 to 2 on the New York Stock Exchange in moderate trading. But fresh buying of technology stocks helped push the Nasdaq composite index of mostly smaller stocks up 2.18 points to 881.58.
Bonds' losses were generally worse than the damage to the stock market, though analysts warned that stocks could see more selling today if bond yields continue to retrace their recent slide.
The steep drop in short- and long-term bond yields over the past few weeks--on the assumption that the Fed would soon lower its benchmark federal funds rate, now at 6%--had helped stoke Wall Street's rally as well.
A turnaround in yields thus would remove a key element of support for stocks, analysts say.
Among Wednesday's highlights:
* Blue chip shares leading the Dow industrials lower included Allied Signal, off 1/2 to 40 1/2; Merck, down 1 1/8 to 48 5/8; IBM, off 1 1/2 to 89 7/8; and United Technologies, down 1 to 77 1/2.
* Bank stocks were sharply lower as bond yields leaped. First Interstate fell 1 1/2 to 85 1/8, BankAmerica sank 1 3/8 to 51 7/8, J.P. Morgan lost 7/8 to 71 1/4, Bank of Boston dropped 3/4 to 36 1/2 and First Bank System gave up 3/4 to 43 1/4.
* Among other financial services stocks, Federal National Mortgage plunged 3 1/4 to 96 3/4, Countrywide Credit lost 3/4 to 19 1/4 and Travelers sank 1 3/8 to 42 5/8.
* On the plus side, airline stocks were boosted by Delta Air Lines' indication that its current-quarter earnings will be better than expected. Delta jumped 1 3/4 to 68 1/4, American Airlines' parent AMR surged 1 3/8 to 69 3/8 and United Airlines' parent UAL leaped 4 1/8 to 120 1/4.
* Health maintenance organization stocks also were strong after brokerage Smith Barney said the industry's earnings outlook is improving. United Healthcare rose 2 to 41 3/8, U.S. Healthcare surged 2 3/8 to 34 3/8, Sierra Health gained 2 1/2 to 29 1/4 and Wellpoint added 5/8 to 30.
* Many tech stocks saw renewed buying. Intel gained 3/4 to 113 1/8, Sun Microsystems added 1 to 48 7/8 and Parametric Technology surged 2 1/4 to 45.
* Caterpillar was up 5/8 to 60 3/4 after the firm raised its dividend 40% and said it might buy back up to 10% of its shares over three to five years.
* Among new issues, Donald Trump's Trump Hotels was unchanged at 14 on the NYSE in its first day of trading. Traders said Wall Street's reception was weak after the shares were priced at the low end of their expected $14 to $16 range.
Trump Hotels owns a 60% interest in the holding company that operates Trump Plaza, one of Trump's three Atlantic City, N.J., casino hotels.
Elsewhere, Latin American stock markets were broadly lower after Argentine authorities acknowledged that the country is probably in recession. Argentina's Merval stock index sank 4.5% to 402.87. Brazil's Bovespa index fell 3.2% and Mexico's Bolsa index eased 0.6%.