NEW YORK — NEW YORK -- A late burst of computer-driven sell orders reversed a broad rally yesterday, leaving U.S. stocks mixed.
Until the final minutes of trading, the market was buoyed by a four-day bond market rally and diminishing pressure for higher interest rates in the months ahead.
"The market should have been up," Joseph DeMarco, managing director equity trading at HSBC Asset Management, a unit of Hongkong & Shanghai Bank.
The Dow Jones industrial average fell 3.70, to 3,768.52, after rising as much as 21.23 earlier in the day. The computer-driven sell orders took nearly 12 points off the average, Birinyi Associates of Greenwich, Conn., said.
"There has been a real short-term improvement in sentiment here, and the rally in the bond market" helped, said Michael Metz, chief market strategist at Oppenheimer & Co.
Among broader market indexes, the Standard & Poor's 500 index fell 1.25, to 458.88, after rallying much as 1.64. Shares of health care, oil and auto companies led the decline.
Meantime, the Nasdaq combined composite index advanced 1.05, to 743.43, with Microsoft Corp., U.S. Healthcare Corp. and Snapple Beverage Corp. leading the way.
Trading was moderate, with 259 million shares changing hands by 4 p.m. on the New York Stock Exchange. About 13 stocks rose for every eight stocks that fell on the Big Board.
"The economic numbers we will be seeing in June will paint the picture of an economy growing at a
more stable, noninflationary pace," and that will be good for the stock market, said Hugh Johnson, chief investment strategist at First Albany Corp.
Concern about the direction of interest rates ebbed yesterday after the New York Times reported that three of the Federal Reserve Board's five governors believe further rate increases aren't needed in coming weeks. The governors concluded that U.S. inflation is under control, the report said.
"The economy is slowing a little bit, and that is a positive" for the bond market, said Alfred Goldman, director of technical research at A. G. Edwards & Sons. Higher rates make fixed-income investments such as bonds more attractive relative to stocks, which are perceived as more risky.
The yield on the benchmark 30-year Treasury bond fell to 7.22 percent, its lowest point since April 27, from 7.27 percent last week.
A decline in the Commodity Research Bureau's index of 21 key commodity prices, from corn to copper, also eased concern about inflation. The index fell 3.65, to 229.6, its second straight decline and the lowest level in more than three weeks.
The price of gold dropped, with
the August futures contract falling 30 cents an ounce, to $382.90. The CRB index and gold prices are closely watched indicators of inflation.
Still, some analysts expressed concern that a slowdown in economic growth sparked by higher rates would translate into weaker corporate earnings later this summer.
"The market right now is in a Catch-22 situation," said Anthony Dwyer, chief market strategist at Sherwood Securities. "If economic numbers come in well, that means there will be inflation." If they show the economy slowing, people will become worried about corporate earnings, he said.