NEW YORK -- U.S. stocks were mixed yesterday after a government report signaled the economy is slowing, raising concern corporate earnings will lose steam.
Stocks at first gained, then began to decline, after the Labor Department reported that prices paid to farmers, factories and other producers were unchanged in March.
The results suggested that the economy is slowing and corporate profits may have peaked, analysts said. "There's a very high likelihood we could be in recession this year," said David Hunter, chief investment officer at Schaenen Wood & Associates, which manages $200 million. "Expectations for earnings are way ahead of what the results will probably be at the end of the year."
Some technology stocks bucked the trend, led by Intel Corp. shares, which reached an all-time high amid news that rival Advanced Micro Devices Inc. will delay a new microprocessor. Evidence that the slowing economy hasn't hurt chip and computer sales helped to lift other technology stocks.
The Dow Jones industrial average fell 11.07 points, to 4,187.08, after rising as much as 17.99 points earlier in the day. Procter & Gamble Co., Caterpillar Inc. and DuPont Co. fell the most. About 1,058 shares rose while 1,119 declined on the New York Stock Exchange.
Companies whose businesses are sensitive to changes in the economy, such as Caterpillar and DuPont, were hurt by speculation the economy had slowed too much.
About 310.6 million shares were traded on the Big Board, up from 260 million shares Monday but below the six-month daily average of 317.42 million shares.
Among broader market measures, the Standard & Poor's 500 stock index, which Monday scored its 18th record high this year, lost 1.48, to 505.53, after increasing as much as 1.84 points earlier in the day. Losses in household products, financial and retail shares overwhelmed gains in health care, computer software and semiconductor stocks.
Stocks rose just after the producer price report, because it suggested the Federal Reserve's seven interest rate increases since February 1994 have put the brakes on economic growth, meaning inflation is in check and interest rates will remain in check. The optimism soon gave way to concern about earnings.
Aggravating that concern was a plunge in the bond market, traders said. Yields on the benchmark 30-year government bond rose as high as 7.4 percent in the middle of the day, after falling to 7.35 percent. The yield ended at 7.37 percent. Rising bond yields hurt equities because they make returns on fixed-income more attractive than those on equities.
Bonds pared their early gains after Federal Reserve Governor Janet Yellen suggested in an interview the Fed might need to raise interest rates again if the economy doesn't slow as much as expected.
In currency markets, the dollar lost ground against most key currencies yesterday, but it was relatively stable vs. the Japanese yen as traders remained cautious ahead of an announcement Friday from Japan on measures intended to help stop the yen's appreciation. The Nasdaq composite index hung on to its gains, thanks largely to its many technology stocks. The index was up 3.57, to 824.83, as Intel Corp., Microsoft Corp., and Novell Inc. shares soared.