Rally Stalls; Dow Finishes Down 13 Points

Stocks slipped Tuesday as jitters over corporate earnings and profit taking after recent strong gains once again kept the Dow Jones industrial average from closing above 6,000.

The Dow ended 13.04 points lower at 5,966.77 after an early rally above 6,000. In the broader market, declining issues led advancers by 14 to 10 on the New York Stock Exchange in active trading.

The Nasdaq composite index of mostly smaller stocks lost 10.72 points to close at 1,240.15, one day after posting its first record close in four months.

Computer chip and cellular phone maker Motorola lent a downbeat tone to the session after reporting sharply lower third-quarter earnings. The company also said it expects to take a fourth-quarter charge to cut costs in its chip business.

Motorola lost 1 to 48 3/4, having already been battered down from 70 7/8 earlier this year.

Tech bellwether Intel, which rose early Tuesday to a record 107 after Merrill Lynch reiterated its positive view of the chip industry, ended down 3 1/8 at 101 5/8 after Salomon Bros. downgraded the stock to “hold,” citing its “high valuation.”

But Intel rebounded somewhat in after-hours trading in the wake of the Semiconductor Industry Assn.’s positive report on September chip orders.

“By and large, investors are hesitating, waiting to see what third-quarter earnings have in store before committing further,” said Joseph Battipaglia, chief investment strategist at Gruntal & Co.

Added Alan Ackerman, market strategist at Fahnestock & Co.: “The assault on 6,000 is not over.”

In the bond market Tuesday yields finished modestly higher. The yield of the benchmark 30-year Treasury bond inched up to 6.80% from 6.78% Monday.

Kevin Flanagan, money market economist at Dean Witter Reynolds in New York, said bond traders were somewhat disappointed by demand at the government’s auction of new 10-year notes Tuesday.

The average yield in the auction was 6.50%, down from 6.54% at the last auction Aug. 7.

In commodity trading oil prices continued to rise on supply worries, as refiners scramble to rebuild heating-oil inventories. November crude futures rose 30 cents to $25.54 a barrel on the New York Merc, the highest settlement price since the start of the Persian Gulf War in 1991.

Among Tuesday’s highlights:

* In the face of uncertain third-quarter earnings some investors retreated to stocks of companies that generally show reliable growth. Some drug stocks, in particular, were in demand. Merck rose 1 1/8 to 71 1/2, Pfizer jumped 1 5/8 to 80 7/8 and Schering-Plough added 7/8 to 63 7/8.

* Expeditors International, a transportation and logistics company, surged 4 3/4 to 40 after forecasting it would top analysts’ third-quarter earnings estimates by 25%.

But McDermott International lost 2 1/2 to 19 1/2 after the marine construction and engineering firm issued a warning on its earnings. Other stocks falling on earnings news included Dow Jones, down 1 3/4 to 35 3/4; and International Paper, down 1 to 41 5/8.

* Among Southland issues, Dole Food slumped 2 1/8 to 37 5/8 after its chief financial officer, Michael Krasna, left the company to become CFO at Republic Industries. Krasna’s departure comes in the wake of last week’s forecast that Dole’s third-quarter results would be at the low end of analysts’ forecasts.

Market Roundup, D5