Philip Morris "hurt the averages today," said Greg Summerville, chief investment officer at Kirr, Marbach & Co. at Columbus, Ind. The stock fell $3, almost 6 percent, to $50.75, after its board took no action Wednesday on a plan to split the company's food and tobacco businesses.
Philip Morris rallied in the past two weeks "on the idea it would be broken in to two parts," Mr. Summerville said. The cigarette maker still faces lawsuits from individual states and concern among some investors that its Kraft General Foods unit could be liable for damages arising from such suits even if the company were divided, he said.
The Dow Jones industrial average dipped 1.84, to 3,753.46, after earlier rising as much as 17.80. Among broader indexes, the Standard & Poor's 500 index rose 0.72, to 457.06, driven by gains in electrical equipment, telephone, drug, electric utility and computer software stocks. The Nasdaq composite index dropped 0.43, to 731.64. Intel Corp., Cisco Systems Inc. and Microsoft Corp. paced the decline.
Almost four stocks rose for every three that fell on the New York Stock Exchange. Trading on the NYSE totaled more than 254 million shares.
Boeing climbed $2.50, to $47, after the Wall Street Journal
reported the company was close to winning an order for 50 jets from China. Shares of General Electric, a maker of jet engines that might be awarded part of the contract, rose $1, to $48.50.
Boeing earlier this week told financial analysts that it was nearing a "sizable" order from the Chinese, said Wolfgang Demisch, aerospace analyst at BT Securities.
United Technologies rose as much as $2.125, to $67, before settling at $65.50, up 62.5 cents, after its chief executive told the Wall Street Journal it's looking to expand its elevator and air conditioner business in emerging markets such as China, Russia and Vietnam.
The brighter outlook for exports comes as some investors question the Clinton administration's trade policy.
"It's that kind of news that gives the overall market a better tone," said Mr. Brown. "The only thing negative in the trade picture I can see is the naivete with which the administration sees the whole subject. They seem to go out of their way to pick fights with our best trading partners."
Part of what strength stocks showed yesterday stemmed from "a more stable bond market," said Lawrence Rice, chief market strategist at Josephthal Lyon & Ross.
Stocks and bonds also got a boost from "a CRB Index that's been down for the past few days," Mr. Rice said. The Commodity Research Bureau's index of 21 key futures prices, a key inflation indicator, dropped 1.98, to 229.61, yesterday, its third straight decline after rising to 238.36 on Monday, its highest point since October 1990.
Yields on benchmark 30-year Treasury bonds rose to 7.36 percent from 7.35 percent Wednesday, after dropping to 7.33 percent earlier in the day amid differing views on whether a high level of unemployment claims implies a slowing of economic growth.
The Labor Department said the four-week moving average for unemployment claims rose to 366,750 from 359,000, the highest average since mid-February.
Kirschner Medical Corp. spurted $1, to $7. The Timonium company signed a letter of intent to merge with Orthomet Inc., a fellow maker of orthopedic products. Orthomet climbed 75 cents, to $7.50.
Upjohn Co. jumped $3.875, to $33. "There are rumors of a buyout circulating," after Switzerland's Roche Holding Ltd. agreed to buy Syntex Corp., another mid-sized U.S. drugmaker, earlier this month, said Susan Marker, a senior trader at Janney Montgomery Scott in Philadelphia.