Rally Stalls; Dow Finishes Down 13 Points

Stocks lost ground Tuesday as worries about corporate earnings and profit taking after recent strong gains once again kept the Dow Jones industrial average from closing above 6,000 points.

The Dow ended 13.04 points lower at 5,966.77 after an early rally stalled at 6,032.36. In the broader market, declining issues led advancers 1,361 to 1,014 on active volume of 435.07 million shares on the New York Stock Exchange.

The technology-studded Nasdaq composite index lost 10.72 points to close at 1,240.15, one day after posting its first record close in four months.

“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.”

Led by Intel, the technology sector retreated after posting big gains recently.

Intel rose early in the session to a 52-week high of 107 after Merrill Lynch reiterated its positive view for the chip industry. But the stock ended down 3 1/8 at 101 5/8 as Salomon Bros. downgraded it based on the price of the shares.

Microsoft lost 2 1/8 to 135 3/8 after trading as high as 137 3/4 early in the session.

Computer chip and cellular phone maker Motorola fell 3/4 to 48 1/2 on news of sharply lower third-quarter earnings. The company also said it expects to take a fourth-quarter charge to cut costs in its semiconductor business.

“Investors have grown more fearful of third-quarter earnings in light of Motorola’s disappointing results,” said Philip Orlando, chief investment officer at Value Line Asset Management.

The yield of the benchmark 30-year Treasury bond rose to 6.80% from 6.78% late Monday. Kevin Flanagan, money market economist at Dean Witter Reynolds Inc. in New York, said the bond market was affected by “somewhat disappointing” results in the government’s auction of 10-year notes. But other analysts said the auction met expectations.

The average yield in that auction was 6.50%, down from 6.54% at the last auction Aug. 7. It is the lowest rate since 10-year notes sold for 5.65% on Feb. 7.

Yields on three-month Treasury bills rose to 5.12% on bills auctioned Monday as the discount gained 0.04 percentage point from the weekly auction, to 5%. Yields on six-month bills advanced to 5.30%, with the discount increasing 0.03 percentage point from the Monday auction to 5.10%. Yields on one-year bills were up to 5.51%, with the discount gaining 0.02 percentage point from late Monday to 5.24%.

Yields are the interest bonds pay by maturity; the discount is the interest at which they are sold.

Among Tuesday’s highlights:

* McDermott International lost 2 1/2 to 19 1/2 after the marine construction and engineering firm issued a warning on its earnings.

* Dole Food lost 2 1/8 to 37 5/8 after its chief financial officer left the company. The executive’s departure comes in the wake of last week’s forecast that third-quarter results would be at the low end of analysts’ forecasts.

* 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%.

* Super Foods jumped 4 to 15 1/4 on news of an acquisition agreement. The deal calls for Nash Finch, which rose 1/4 to 16 3/4, to start a cash tender for all 11.2 million Super Foods shares for $15.50 a share.

Market Roundup, D5