NEW YORK -- U.S. stocks were mixed yesterday as lingering concern that the Federal Reserve will raise interest rates offset a rally in shares of tobacco companies sparked by B.A.T Industries' takeover of American Brands Inc.
"This is exactly what you want to see happen after yesterday," said Todd Clark, senior block trader at Mabon Securities. "The fact that we pulled back nicely suggests that there isn't much selling left."
The Dow Jones industrial average fell 6.24, to 3,699.54, after soaring 57.10 Monday, to 3,705.78, its first close above 3,700 since March 28. Declines in Chevron Corp. and Texaco Inc. offset rallies in Walt Disney Co. and Philip Morris Cos.
The Standard & Poor's 500 index fell 0.84, to 451.87, after gaining 5.08, to 452.71, Monday. Gains in shares of tobacco companies were tempered by a decline in oil stocks as crude oil prices dropped.
West Texas crude oil for delivery in June fell 33 cents, to $16.91 a barrel, yesterday, hurting shares of Chevron, down $2, at $90.625; Exxon Corp., down 75 cents, at $62.875; and Texaco, down $1.125, to $64.50.
Tobacco stocks rose after Britain's B.A.T Industries agreed to pay $1 billion in cash to American Brands Inc. for its American Tobacco division, maker of Carlton and Pall Mall cigarettes. American Brands shares jumped as much as $3, to $34.75, before closing at $34.625.
"That deal is helping to attract some interest to the other tobacco companies," said Robert von Pentz, chief investment officer at Riggs Investment Management Corp. Shares of RJR Nabisco Holdings Corp. rose 37.5 cents, to $6.875; Philip Morris Cos. rose $1.875, to $54.125; UST Inc. rose 37.5 cents, to $27.125; and B.A.T's American depositary receipts, representing two common shares, rose 56.25 cents, to $13.75.
Meanwhile, the Nasdaq combined composite index rallied 3.41, to 734.21, after rising 8.25 Monday.
Trading was moderate, with 289 million shares changing hands by the close on the New York Stock Exchange. Five stocks rose for every four that fell on the Big Board.
"The big thing is still the fear of the Fed," said Don Hays, director of investment strategy at Wheat First Butcher Singer. Still, the yield on the 30-year Treasury bond receded to 7.10 percent from 7.15 percent at Monday's close.
"I think we should regard the gains in the bond market today as part of the recovery," said Christine Callies, market analyst at Brown Bros. Harriman.
U.S. stock, options and futures exchanges will be closed today to observe the national day of mourning for former President Richard M. Nixon, who died last Friday at 81. The last time the New York Stock Exchange closed for a former president's funeral was Jan. 25, 1973, in honor of Lyndon B. Johnson.