"TC NEW YORK -- U.S. stocks closed mixed yesterday as a slump in beverage stocks, sparked by a profit warning from PepsiCo Inc., was offset by gains in drug stocks.
The Dow Jones industrial average rose for the first time in four days, climbing 3.69, to 3,753.14, as stocks traded in a 14.47-point range, the smallest one this year.
PepsiCo's warning that second-quarter earnings will be "about even" with the 53 cents a share it earned a year ago heightened concern that U.S. corporate earnings in the second half may fall short of investors' expectations. Analysts were looking for 62 cents a share.
"It's clear that there will be increased questioning of corporate profitability," said Doug Kass, director of institutional equities at J. W. Charles Securities in Boca Raton, Fla. "There's no area, no sector ofthe market that's sacred."
Shares of PepsiCo, the world's second-largest soft drink maker, tumbled $3, to $31.50, as 21.4 million shares changed hands, making it the most actively traded U.S. stock.
The Standard & Poor's 500 index rose 0.81, to 457.87, its first advance since last Friday.
The Nasdaq combined composite index slipped 0.91, to 728.88, after tumbling 9.5 points Wednesday. Shares of Oracle Systems Corp., Intel Corp., Novell Inc. and Snapple Beverage Corp. dragged the index lower.
About four stocks declined for every three that rose on the New York Stock Exchange, where 253 million shares traded. The three-month daily average is 289.89 million.
Beverage and restaurant stocks were among the worst performers on the heels of Pepsi's outlook. Coca-Cola slipped $1.25, to $40.625; Snapple slumped $1.75, to $24.25; McDonald's fell $1.875, to $60; and Morrison Restaurants lost $1, to $23.125.
Drug stocks rose after a Senate panel scrapped a plan to review prices of some new drugs under President Clinton's health-care plan.
"Legislation is no longer a reason to remain out of the group," said Bob Hodgson, an analyst at Cowen & Co. The analyst raised his opinion on Eli Lilly, Schering-Plough and Mylan Laboratories Inc., Merck and Bristol-Myers Squibb Co.
Merck rose $1, to $31.75; Eli Lilly & Co. jumped $2, to $57; Pfizer Inc. climbed $1.125, to $63.375; Bristol-Myers gained 87.5 cents, to $55.625; and Mylan Labs added 37.5 cents, to $21.375.
Besides Pepsi, EMC Corp., Intel , Microsoft Corp. and Compaq Computer Corp. were the most actively traded stocks in U.S. composite trading.
Intel fell 75 cents, to $59, as semiconductor shares skidded for a second day amid concern that a report on May orders will show a drop from the previous month. Analysts expect the May ratio fell to between 1.12 and 1.14, from an upwardly revised 1.15 for April.
Texas Instruments Inc. skidded $1.375, to $74.875. Advanced Micro Devices Inc. lost 25 cents, to $26.125. Applied Materials Inc. fell $2, to $38.75.
Spartan Motors Inc. gave up $2.375, at $15.375. The maker of truck and mobile-home chassis expects second-quarter earnings to fall below the first-quarter and year-ago levels, said an analyst at Johnson Rice & Co., who cut his rating to "hold" from "buy" and his earnings estimates as a result.
EMC Corp. fell $1.75, to $13.625. The maker of information storage and retrieval products was cut to medium-term "neutral" from "above average" at Merrill Lynch & Co. Shares of Storage Technology Corp., a competitor, lost $1.625, to $29.
Seitel Inc.'s shares rose $1.25, to $31. The oil-services company's DDD Energy Inc. subsidiary agreed to jointly develop natural gas and crude oil properties with Cox & Perkins Exploration Inc.