NEW YORK -- U.S. stocks were mixed yesterday as gains in oil and bank issues tempered losses in shares of tobacco companies.
The rise in bank stocks came after Fleet Financial Group Inc. agreed to buy Shawmut National Corp. for $3.7 billion, a merger which creates the ninth-largest U.S. banking company. Shawmut's stock soared $4.375, to $25, and was the fourth-most actively traded issue.
"The strength in the bank area is an indication that more mergers could be in line," said Paul Hennessey, head of equities trading at Boston Co. Asset Management Group. "The acquisition talk from a year ago may be starting to resume."
The Dow Jones industrial average rose 10.43, to 3,963.97, its sixth gain in the last seven sessions. On Friday, the average fell 33.98 points in the biggest one-day drop since a 46.77-point decline Jan. 19. Aluminum Co. of America, International Paper Co., Texaco Inc. and Eastman Kodak Co. rose the most yesterday.
The biggest loser among the Dow industrials was Philip Morris Cos., which dropped $2.375, to $57.875. The state of Florida sued 17 tobacco companies to recover the cost of treating some victims of smoking-related illness. Last week in New Orleans, tobacco companies failed to head off a class-action lawsuit after a judge certified a suit that could involve 50 million plaintiffs.
Other tobacco stocks also fell. RJR Nabisco Holdings Corp. lost 25 cents, to $5.375; B.A.T. Industries PLC's American depositary receipts fell 62.5 cents, to $13; UST Inc. shed 75 cents, to $29.875; and American Brands Inc. dropped 50 cents, to $37.
Among broad market indexes, the Standard & Poor's 500 rose 0.75, to 482.72, below its all-time closing high of 485.22, set Thursday. The Nasdaq combined composite index fell 2.35, to 784.62, its third straight decline after rising 11 of the previous 12 sessions.
The S&P; regional banking index of 21 stocks rose as much as 1.71 before closing up 0.46, at 178.39. Fleet, which will issue new stock to pay for the transaction, saw its shares fall $3.25, to $30.375. BayBanks Inc. surged $2.875, to $63; US Bancorp gained 62.5 cents, to $25.25; Wells Fargo & Co. jumped $1.125, to $157.75; Mellon Bank Corp. rose $1, to $38.875; and Boatmen's Bancshares Inc. added 37.5 cents, to $30.625.
About six stocks fell for every five that rose on the New York Stock Exchange, where about 309 million shares traded hands. Declining issues have now outpaced advancers three straight days and four of the last five.
Oil issues gained on optimism that energy consumption isn't waning and the companies' attractive dividends will draw investor interest, traders said. Separately, Texaco Inc. said it will sign a multimillion-dollar agreement for nine plants in China that convert fuels like coal and heavy oil into clean gas.
Mobil Corp. rose $1, to $88; Texaco gained 87.5 cents, to $63.50; Exxon Corp. added 62.5 cents, to $64; Atlantic Richfield Co. rose $1.125, to $107.75; and Occidental Petroleum Corp. jumped 87.5 cents, to $19.875.
Helping the outlook for stocks were expectations for rising corporate earnings, traders said.
"The momentum of corporate earnings is going to carry the stock market into the next quarter," said Kenneth Ducey, director of trading at BT Brokerage. "Investors think most of the interest rate raises are behind us."
Stocks were partly held in check by the dollar's decline. The dollar tumbled to a 28-month low against the German mark of 1.4690. It also fell to 97.06 yen, weaker than the 97.52 yen it reached early in European trading but stronger than a three-month low of 96.775 yen set Monday. A weak U.S. currency makes dollar-denominated assets less attractive to foreign investors.
"The weakness in the dollar must end if the rallies in the U.S. bond and stock markets are to be sustained," said John Shaughnessy, director of research at Advest Inc.
Shares of Mexican companies traded in the U.S. fell as the peso weakened amid concern a $20 billion credit line from the U.S. wouldn't prevent companies with large debts from defaulting.