NEW YORK -- U.S. stocks closed mixed yesterday, as concern about profits for oil, drug, and computer companies vied with optimism about falling long-term interest rates.
"We've had such a big move," said Peter DaPuzzo, senior managing director at Cantor, Fitzgerald & Co. "The economic numbers are fairly good, interest rates are low, and there's not much inflation. The problem is the market has a lot of that in it already. Companies have to start delivering on the earnings."
The Dow Jones industrial average, after soaring 27.11 Wednesday, gained 8.38, to 3,550.93, putting it within a hair of its all-time closing high of 3,554.83, which was set May 27.
Gains in Minnesota Mining & Manufacturing Co., J. P. Morgan & Co., and American Telephone & Telegraph Co. led the advance in the Dow industrials. They outweighed declines in Merck & Co., Texaco Inc. and Procter & Gamble Co.
Among broader gauges, Standard & Poor's 500 Index slipped 0.86, to 449.22. The Nasdaq Combined Composite Index retreated 3.80 from Wednesday's record close of 712.49, to close at 708.69 yesterday.
Decliners outnumber advancers by a margin of 8-to-7 among common stocks on the New York Stock Exchange.
A report on Wednesday that inflation abated in June sent long-term interest rates to a record low 6.56 percent, igniting a rally in stocks.
The yield on the 30-year Treasury bond dipped further yesterday, to as low as 6.54 percent. Long-term interest rates are declining after the Labor Department reported Wednesday that consumer prices were unchanged last month.
"The stock market is showing a lot of resiliency, due to interest rates," said Daniel Marciano, senior vice president in equity trading at Dillon, Read & Co.
Peter Cardillo, research director at Westfalia Investments, said he thinks Wednesday's surge marked the beginning of a rally that could sweep the Dow industrials to 3,700 by the end of the summer.
Trading was brisk, with about 278 million shares changing hands on the Big Board.
Within the Dow industrials, J. P. Morgan Co. gained $1.50, to $71.625, on the money-center bank's 33 percent increase in second-quarter earnings.
Procter & Gamble came off an early rise to close down 87.5 cents, at $51.625, after some analysts said the household products maker's restructuring plans might not go far enough to shore up earnings. P&G; announced plans to cut about 13,000 jobs, or 12 percent of its work force, and close a fifth of its plants as part of a restructuring.
Oil stocks weakened amid the threat of Iraq resuming crude exports onto glutted world markets, which would drive prices even lower, traders said. Texaco fell $1.25, to $61.75; Mobil Corp. lost $1.375, to $69.875; and Chevron Corp. fell $1, to $83.50.
Meantime, drug companies fell after Smith Barney analyst Christina Heuer reduced her investment rating on the group. Ms. Heuer said the industry outlook was poor because numerous patents were expiring and competition from generic drug manufacturers was increasing.
Merck fell $1, to $33.75; Bristol-Myers Squibb sank $2, to $58.125; Pfizer Inc. declined $1.50, to $63.25; and Warner-Lambert Co. slid $1.25, to $67.50.