Dow Drops Back From 10,000 Mark

It was fun while it lasted.

Stocks pulled back Tuesday after Monday’s record run: The Dow industrials fell 93.52 points, or 0.9%, to 9,913.26, leaving 10,000 behind, at least for the moment.

In a day of strange crosscurrents, oil prices rose to a one-year high, but that potential inflationary signal failed to hurt bonds.

Meanwhile, the Federal Reserve also blessed the status quo as far as the inflation outlook goes, as policymakers met and left short-term interest rates unchanged. Yet many interest rate-sensitive utility stocks tumbled anyway.

Wall Street couldn’t sustain the momentum that had lifted the Dow 184.54 points to a record 10,006.78 on Monday, the first close above the 10,000 mark.

“Clearly, the 10,000 euphoria is wearing a little thin right at the moment,” said Ned Riley, chief investment officer at BankBoston.

Among blue chips, some key consumer giants were hit Tuesday. Coca-Cola, a Dow stock, sank $1.56 to $63.25 after warning late Monday that its first-quarter sales will be below expectations.

Likewise, Gillette slid $3.38 to $60.25 after Goldman Sachs analyst Amy Low Chasen said the firm’s first-quarter sales probably rose 2% to 4% rather than the 5% to 7% that management had forecast. Gillette declined to comment.

Coke and Gillette both are suffering from weakness in many foreign economies, analysts said.

“Any company with international exposure . . . is experiencing the slowdown of those economies,” said Joseph Williams, a money manager at Commerce Bank in Kansas City, Mo.

Coke archrival PepsiCo lost 81 cents to $39.88.

Still, many analysts are upbeat about the potential for strong first-quarter earnings reports from a broad cross-section of companies, given the domestic economy’s strength.

Earnings reports will begin to flow out in earnest next week.

Another drag on the Dow was the plunge in Philip Morris, down $3.44 to $37.75 after an Oregon jury awarded record damages to a lung cancer victim’s family.

In the Nasdaq market, the composite index had an easier day, off just 0.5% to 2,480.29, as buyers continued to step up to the plate for many big tech shares. Analysts said end-of-quarter “window dressing” by fund managers positioning their portfolios for first-quarter reports may have helped the tech stocks.

But the broad market, once again, was lower: Losers outnumbered winners by 17 to 13 on the New York Stock Exchange and by 22 to 17 on Nasdaq.

Buyers did turn out in the bond market, where the 30-year Treasury bond yield slid to 5.58% from 5.64% on Monday. The Fed’s decision to leave rates alone, while expected, still may have encouraged some bond buyers, analysts said.

“We’ve been putting more than we normally do in the Treasury market,” said Thomas Carpenter, who helps manage $4 billion at ASB Capital Management in Washington. “The inflation-adjusted return is very compelling.”

But the Dow utilities index, usually a winner as bonds rally, slid 2.1%. That sell-off also could be related to quarter-end portfolio shuffling, some traders said.

In commodities trading, crude oil futures continued to rebound on hopes that major producing nations will indeed rein in production, ending the global glut.

Crude oil for May delivery rose 36 cents, or 2.2%, to $16.80 a barrel in New York, the highest close since Feb. 2, 1998.

In the oil futures trading pits, “There’s a lot of money out there that missed the opportunity to buy during a big run-up this month, and every time there’s a dip, they’re in there buying,” said Bill O’Grady, head of fundamental futures research at A.G. Edwards.

Among Tuesday’s highlights:

* Profit-taking clipped such blue chips as American Express, off $1.56 to $121.50, and AT&T;, down $1.31 to $80.38. But GE rose $1.31 to a record $113.31.

* America Online rocketed $12.13 to a record $144.50 after announcing an Internet commerce alliance with Sun Microsystems, which rose $1.44 to a record $125.94. Analyst James Preissler at PaineWebber said AOL could reach $215 in 12 months.

Among other Net stocks, Amazon.com surged $15.06 to $164.69 as some traders focused on the company’s plans to compete with EBay in the online auction business. EBay fell $10.66 to $137.13.

* US Airways led airlines higher, rising $3.31 to $49.81 after saying it will buy back $500 million in stock.

UAL, parent of United Airlines, jumped $2.25 to $79.38, while AMR, parent of American Airlines, soared $3.25 to $59.88.

* Huffy slid $1.88 to $13.44 after the bicycle maker said first-quarter earnings will fall to 8 cents to 12 cents a share, before charges, from 30 cents a share last year.

* Utility stocks falling hard included Columbia Energy, down $2 to $51.31; Texas Utilities, off $1.88 to $41.31; and Edison International, off $1.25 to $22.06.

Market Roundup, C10