Stocks Finish Mostly Lower

Stocks ended mostly lower for a second straight day, and the Standard & Poor’s 500 index fell for the sixth time in seven sessions, amid renewed jitters over energy prices and inflation.

Crude oil prices jumped after the International Energy Agency said global demand would grow faster next year than this year.

Also, minutes from the Federal Reserve’s last meeting, released Tuesday, reinforced that the central bank was worried about inflation and intended to keep tightening credit to damp price pressures.

The Dow Jones industrial average managed a slight gain, adding 14.41 points, or 0.1%, to 10,253.17, helped by strength in shares of IBM.

But falling stocks outnumbered winners by more than 3 to 2 on the New York Stock Exchange and by more than 2 to 1 on Nasdaq.

The blue-chip S&P; 500 fell 2.46 points, or 0.2%, to 1,184.87, a five-month low. It is off 4.8% from its four-year high reached Aug. 3.

The Russell 2,000 index of smaller stocks had a rough day, losing 1.2% as investors pulled away. The index is down 8.5% from its record reached Aug. 2.

The Nasdaq composite, dominated by tech issues, slid 17.83 points, or 0.9%, to a three-month low of 2,061.09 as semiconductor stocks fell for a second day on earnings concerns. And after the close of trading, Apple Computer disappointed investors with its quarterly report.

The market opened higher, helped by bullish earnings reports late Monday from companies including Genentech and Alcoa. They are among the first major firms to issue results.

But rising oil prices quickly soured the mood. Near-term crude futures in New York ended with a gain of $1.73, to $63.53 a barrel, after the International Energy Agency said it expected worldwide oil demand to rise 2.1% next year, compared with a projected rise of 1.5% this year.

The report from the agency did “serious damage” to the idea that energy demand might weaken significantly because of high prices, a report from investment firm Barclays Capital said.

Natural gas prices were higher as well: Near-term futures rose 54 cents to $13.52 per million British thermal units.

The minutes from the Fed meeting also hurt investor sentiment. Policymakers felt that, even with short-term interest rates at four-year highs, they were “below the level that would be necessary to contain inflationary pressures,” the minutes said.

Yields rose in the Treasury bond market as investors bet on additional Fed rate hikes.

The 10-year T-note ended at 4.39%, up from 4.35% on Friday. (The bond market was closed Monday in observance of Columbus Day.)

The two-year T-note ended at a four-year high of 4.22%, up from 4.17% on Friday. The yield was 3.64% as recently as June 30.

“The Fed is on track to continue to tighten” further, said Mark MacQueen, co-founder of bond fund manager Sage Advisory Services in Austin, Texas. “Yields will be higher by the end of the year.”

On Wall Street, bullish analysts had been hoping that third-quarter earnings reports would give the market a lift. But that hasn’t been the case so far.

Among the day’s market highlights:

* Semiconductor shares slid after El Segundo-based International Rectifier warned late Monday that its quarterly results would fall short of expectations. International Rectifier plunged $6.33 to $34.37.

Xilinx, which tumbled Monday after issuing an earnings warning, fell 70 cents to $22.07, a two-year low. Other chip stocks ending down for the day included Cypress Semiconductor, off 51 cents to $12.76; Broadcom, off $1.33 to $43.35; and Texas Instruments, off 69 cents to $29.37.

* IBM bucked the tech sell-off, adding $1.94 to $83.19 after brokerage CS First Boston raised its rating on the stock to “outperform” from “neutral,” citing expected improvement in the company’s businesses in 2006.

* Apple rose $1.22 to $51.59 in regular trading, but dived to $46.20 in after-hours activity as some investors were unimpressed with the company’s quarterly sales and profit report.

* Genentech’s report Monday of a 56% jump in third-quarter earnings helped its shares advance $2.59 to $84.59. But most other biotech issues lost ground. Amgen fell 36 cents to $76.34, Biogen Idec lost 95 cents to $36.57 and Cephalon dropped 81 cents to $43.96.

* In the industrial sector Alcoa edged up 19 cents to $22.85 after its profit report late Monday beat expectations. But Potlatch slumped $2.28 to $46.09 after the forest-products company said quarterly results would be “significantly below” estimates because of high energy costs.

* GM rebounded 94 cents to $26.42 after diving to a 10-year low Monday in the wake of the bankruptcy filing of Delphi, a major parts supplier to GM. The stock had been up as much as $2.42 at midday, after investor Kirk Kerkorian was cleared by the government to increase his stake in the automaker.

* Energy stocks rallied as oil and gas prices rose. ConocoPhillips gained $1.38 to $64.61, Todco was up $1.59 to $38.25 and Anadarko Petroleum was up $2.66 to $91.83.

In the coal sector, Peabody Energy gained $3.64 to $78.79 and Arch Coal rose $2.29 to $67.06.

* Carlsbad, Calif.-based K2 plummeted $1.55 to $9.14 after warning late Monday that 2005 earnings would fall short because of reduced demand for paintball products.

* Japan’s Nikkei-225 index surged 2.5% to 13,556.71, its biggest one-day gain in a year, on a strong report on new machinery orders.