Stocks Hold Ground Again Despite Rising Rates; Dow Off 9

Stocks were mixed Monday, withstanding another day of rising interest rates. Trading was quiet ahead of this week’s inflation reports on May wholesale and consumer price levels.

The Dow Jones industrial average fell 9.24 points to 5,687.87, rebounding from a loss of more than 30 points several times during the session. On Friday, the Dow gained nearly 30 points, shrugging off an early 85-point slide spurred by inflation worries after a surprisingly strong employment report.

“You didn’t see any major selling. There was no rush to take action one way or the other,” said A. Marshall Acuff Jr., market strategist at Smith Barney. “It was more like the buyers were on strike--legitimately so after the volatility on Friday.”

Smaller and more speculative issues outperformed the blue-chip sector.

The yield on the 30-year Treasury bond, a benchmark used to determine the interest rates charged on many types of loans, rose to 7.12% from 7.05% on Friday and 6.9% on Thursday.

Bond market investors were clearly growing more worried about the strength of the economy and the prospect of a pickup in inflation.

Some analysts said stock investors remain hopeful that the economic strength indicated by recent employment reports will translate into rapid earnings growth, outweighing the risks of inflation-fighting interest rate hikes by the Federal Reserve Board.

Declining issues outnumbered advancers by a margin of almost 9 to 8 on the New York Stock Exchange, where volume totaled just 334.44 million shares, down sharply from Friday’s 445.54 million.

Among Monday’s highlights:

* Westinghouse Electric rose 7/8 to 19 5/8 after its chairman said it will weigh splitting its broadcast and industrial units.

* Community Health Systems jumped 8 3/8 to 51 3/4 after Forstmann Little agreed to buy the company for $52 a share in a deal valued at about $1.37 billion, including debt.

* Storage Tech rose 4 3/8 to 39 1/2 after the company said it signed a deal with International Business Machines to make storage subsystems for IBM. Storage Tech said the pact is the biggest reseller agreement it has ever signed.

* Iomega surged 6 to 43 7/8 after IBM said it would include Iomega’s popular high-density Zip drives in a new model of its Aptiva personal computer.

* Chiron rose 2 1/2 to 99 1/2 and Cephalon added 1/8 to 23 1/4 after an advisory panel voted to allow early access to their Myotrophin drug for Lou Gehrig’s disease.

Overseas, Tokyo’s Nikkei stock average fell 0.2%, Frankfurt’s DAX index rose 0.1% and London’s FTSE-100 rose 0.6%.

Chicago Board of Trade corn contracts gained the daily 12-cent-per-bushel limit, with July corn up the limit for a third consecutive session. Wheat and soybeans rose largely with corn. Rain that will likely delay corn planting may also harm ripe winter wheat in the South.

“The engine that’s pulling the train today is corn,” said a CBOT grain trader.

Corn farmers have been frustrated in planting efforts this spring as steady showers have soaked fields. Already beyond the June 1 planting deadline, a few farmers still held out hope of finishing planting. But if the rains linger, as forecasts suggest, the chances of finishing are not good.

What has been planted is germinating in saturated fields, with the excessive moisture likely to restrict growth. In a weekly report released after the close, the U.S. Department of Agriculture said that only half the U.S. corn crop is in good condition.

July corn closed up 12 cents at $4.71 per bushel, and the December contract, which reflects the price of this fall’s harvest, also rose 12 cents to $3.64 3/4.

Market Roundup, D8