NEW YORK -- The Dow Jones industrial average and Standard & Poor's 500 index squeaked to new highs yesterday even as the market posted its broadest decline since Jan. 30.
The market's momentum faded as telephone and chemical issues weakened, overshadowing a jump in Hewlett-Packard Co. that rallied other technology stocks.
The decline in stocks came as the dollar fell below 1.5 German marks for the first time in more than three months, raising concern about whether U.S. stocks and bonds will stay attractive to overseas investors.
"This may actually be spelling the end of the two-month surge" in stocks that lifted the Standard & Poor's 500 index 8 percent since December, said James Solloway, director of research at Argus Research. "When you have a weak dollar, it causes a reversal in capital flows" away from U.S. assets, he said.
The Dow Jones industrial average advanced 1.35, to 3,987.52, its second straight record. Eastman Kodak Co., Aluminum Co. of America and Coca-Cola Co. led the advance. Wednesday's 27.92-point advance came amid growing confidence that corporate earnings will benefit from a longer economic expansion.
Almost 13 stocks fell for every eight that rose on the New York Stock Exchange, the largest proportion of decliners in almost three weeks.
The S&P; 500 rose 0.68, to a record 485.22, its third straight record, as Hewlett-Packard soared $7.50, to $112.875. The No. 2 U.S. computer maker said fiscal first-quarter net income surpassed analysts' estimates for the fifth consecutive quarter. It also raised its dividend 33 percent and declared a 2-for-1 split.
The Russell 2000 index of small stocks dropped 1.54, to 255.93, while the Wilshire 5,000 index reached a record 4,782.47, up 1.33.
Stocks prices dropped through most of the session, and the Dow industrials might have ended as much as 20 points lower if not for buying related to today's simultaneous expiration of options on stock indexes and individual stocks, said Anthony Conroy, director of trading at $175 billion BT Global Asset Management, a unit of Bankers Trust New York Corp.
The rise in Hewlett-Packard and technology issues outweighed a slump in telephone and chemical stocks.
Hewlett drove up other technology shares. Adobe Systems Inc. surged $2, to $34.50, after Hewlett said its printer business remains strong. Adobe receives royalties from laser printer makers that use its Postscript printer language.
Elsewhere, Motorola Inc. rose $2.50, to $64.25; Texas Instruments Inc. climbed $1.75, to $80.25; Micron Technology Inc. surged $2.50, to $57.25; and Intel Corp. rose 12.5 cents, to $79.875; after setting a 52-week high of $80.75.
Telephone shares tumbled after AT&T; announced plans for a series of rate cuts, while Dow Chemical Co. slumped amid
questions about its legal liability in breast implant cases.
AT&T; dropped $1, to $51.375; Sprint Corp. slid 87.5 cents, to $29.875; MCI Communications Corp. fell 87.5 cents, to $19.75; LDDS Communications Inc., the fourth-largest U.S. long-distance carrier, fell 87.5 cents, to $21.125; SBC Communications Corp. eased 87.5 cents, to $42; and BellSouth Corp. declined 75 cents, to $58.50.
Questions about Dow Chemical Co.'s potential exposure to legal liabilities weighed on chemical and other issues. Dow slid $1.50, to $65.375; Monsanto Co. dropped 87.5 cents, to $76.75; Union Carbide fell $1, to $28; and Arco Chemical Co. fell 25 cents, to $42.25. Corning Inc., Dow's partner in Dow Corning Corp., declined $1, to $31.75.