NEW YORK -- U.S. stocks were mixed yesterday on concern over rising interest rates and the possibility of U.S.-led military action against the Bosnian Serbs.
The Dow Jones industrial average closed 4.71 lower, at 3,437.19, as the average rebounded from a session low of 3,427.78.
Standard & Poor's 500-Stock Index declined 0.95, to 442.31, and the Nasdaq composite Index advanced 1.40, to 681.44. The American Stock Exchange Market Value Index lost 0.89, to 426.06, down for the first time in eight sessions.
"More and more people are convinced interest rates have bottomed," said John Blair, head trader at NatWest Securities Inc. "Without low rates, stocks are going to have a tough time going higher."
The benchmark 30-year Treasury bond fell 5/8 , or $6.25 per $1,000, to 103 16/32. The yield was 6.84 percent, up 4 basis points. The record low yield is 6.65 percent, set March 8.
The rise in long-term rates was prompted yesterday by concern about next week's sale of $35 billion in notes and bonds, including $8.25 billion in 30-year bonds, traders said. A rise in Treasury bond yields is bad for stocks because stocks are less attractive relative to bonds the more yields rise.
"The bond market is getting messy, and that isn't good news for stocks," said Jim Benning, a trader at BT Brokerage.
Investors were also made nervous by the Serbs' rejection of a U.N. peace plan because it increases the chances of U.S. intervention in the former Yugoslavia, said Robert Ritter, market analyst at Ladenburg, Thalmann & Co.
Trading was lighter than usual, with about 223 million shares traded on the New York Stock Exchange.
Declining common stocks led advancing issues by about 8-to-7 on the New York Stock Exchange. International oil, regional bank and retail shares were the biggest losers, while tobacco, electrical equipment and household product stocks were the biggest gainers.
Shares of retail companies continued to slump following the release of disappointing sales reports for April, as cool weather and smaller tax refunds discouraged consumers. Wal-Mart Stores Inc. was down 37.5 cents, at $26.25.
Tobacco stocks surged on reports that RJR Nabisco Holdings Corp. ended discounts on its low-priced Monarch cigarettes. Philip Morris Cos. had cited RJR's price reductions when it cut prices on its flagship Marlboro brand. Philip Morris gained $1.875, to $51, while RJR rose 12.5 cents, to $5.75.
Cisco Systems Inc. rose $3.50, to $48.75. The maker of routers and other products for computer networks said its fiscal third-quarter earnings doubled.