Stocks Mixed, Yields Down as Fed Meets

Stocks ended mixed Tuesday, with blue-chip shares rising as new data reinforced hopes that the Federal Reserve Board won’t see a need to raise interest rates this week or in the near future.

The Dow Jones industrial average briefly dipped into negative territory in the afternoon after giving back a 75-point morning gain, but it finished strong, ending 49.54 points higher at 7,722.33 on the first day of the third quarter.

But leading technology shares and smaller-company issues were mostly lower throughout the day, weighing down the Nasdaq market. The Nasdaq composite index lost 3.82 points to 1,438.25.

Stocks started the day flat, but the blue-chip sector quickly drew a boost from the bond market, where long-term yields eased after reports suggested some moderation in factory activity and construction spending.

The temporary afternoon pullback in blue chips came with the release of a report showing some strength in retail sales.

Overall, investors saw little reason to believe that the data would spur another interest rate boost by the Fed, which met Tuesday and continues to meet today.

“I don’t think anybody’s scared at this point” about a Fed move at this meeting, said Arnie Owen, managing director of capital markets at Cruttenden Roth.

Bond yields seesawed but ended lower, with the 30-year Treasury bond finishing at 6.73%, down from 6.78% on Monday.

While Wall Street is nearly unanimous in expecting the Fed to leave interest rates steady today, it still faces a critical test in the monthly data on payrolls and wages.

That report is due Thursday instead of its traditional Friday release because of the Independence Day-shortened workweek.

Elsewhere, France’s benchmark stock index soared 3% to an all-time closing high as the dollar set a five-year high against the franc, boosting exporters.

Stocks also rocketed in London, where the FTSE-100 index jumped 2.7%.

But Tokyo shares sank 2% amid concerns over spreading brokerage scandals.

Among Tuesday’s highlights:

* Financial issues, which enjoy better profits when interest rates aren’t rising, led the Dow’s advance: J.P. Morgan rose 2 7/8 to 107 1/4, Travelers Group rose 1 11/16 to 64 3/4 and American Express rose 1 1/4 to 75 1/2.

In the broader market, financial issues gained as well. BankAmerica rose 1 3/16 to 66 3/8, NationsBank rose 13/16 to 65 3/8, Citicorp jumped 2 3/4 to 123 5/16 and Bank of New York rose 1 1/16 to 44 11/16.

* The Dow also drew a boost from IBM, up 1 9/16 to 91 13/16, but most big-name technology issues retreated. In Nasdaq trading, Intel fell 2 3/4 to 139 1/16, Dell Computer fell 3 1/16 to 114 3/8 and Microsoft fell 1 7/16 to 124 15/16.

Other tech issues declined, including Oracle, off 1 13/16 to 48 9/16, and Computer Associates, down 1 1/2 to 54 3/16.

But Compaq rose 2 3/8 to 101 7/8 after saying it will split its stock 5-for-2.

* Energy stocks were broadly higher, as oil prices rose.

In commodities trading, soybean prices fell on talk that imports from Brazil will ease tight supplies in the U.S. before an expected record crop is harvested in the Midwest this fall.

At the Chicago Board of Trade, soybeans for July delivery plummeted 39 cents a bushel to close at $7.32.