NEW YORK — NEW YORK -- U.S. stocks fell yesterday amid renewed concerns that slower economic growth will trim corporate profits in the second half of the year.
Falling U.S. government bonds for the first time in five days pulled down stocks as well, as did the dollar's weakness against the Japanese yen.
The Dow Jones industrial average fell 12.61, to 3,755.91, in slow trading as yields on the benchmark 30-year Treasury bond rose to 7.26 percent from 7.22 percent Monday. Caterpillar Inc., Aluminum Co. of America and International Paper Co. saw the worst losses.
After the Federal Reserve's four interest rate increases this year, investors "are seeing signs of a slowdown" in the economy, said Peter Canelo, chief investment strategist at NatWest Securities. "They're not conclusive, but people are seeing new home sales, mortgage applications, house-buying plans and auto production at least plateau if not decline."
Companies that react most to swings in interest rates and the economy had the steepest declines: banks, telephone, chemical, paper, automobile and electric utility stocks.
Among broad market indexes, the Standard & Poor's 500 index fell 0.66, to 458.22. The Nasdaq combined composite index dropped 4.13, to 739.30. Microsoft Corp., Cisco Systems Inc. and Applied Materials Inc. paced the decline.
About four stocks dropped for every three that rose on the New York Stock Exchange, where more than 234 million shares changed hands, down from 259.1 million Monday.
"The market clearly doesn't like the concept of a weaker dollar," said Gil Knight, fund manager at ASB Capital Management in Washington, which manages assets of $10 billion. "The market interprets it as an attempt to devalue the currency, which is ultimately inflationary."
The dollar fell 1.04 yen, to 104.25, as U.S. Trade Representative Mickey Kantor said the U.S. is prepared to use trade laws to force Japan to open its markets.
Companies' "earnings momentum is slowing," said Claudia Mott, director of small-company research at Prudential Securities. "We're starting to see signs of that, and [analysts'] estimates are going to be coming down for next year."
Investors are also trying to divine if the Fed will raise rates for a fifth time this year at a policy meeting in early July, said John Shaughnessy, director of research at Advest Inc. in Hartford, Conn.
Microsoft Corp., Chrysler Corp., Telefonos de Mexico American depositary receipts, IDB Communications Group Inc. and DSC Communications Corp. were the five most actively traded U.S. stocks.
Microsoft, the world's largest independent software maker, fell 87.5 cents, to $53.625.
The company was added to the S&P; 500 at the close of trading Monday, when a record 47.7 million shares changed hands.