NEW YORK -- U.S. stocks fell yesterday amid concern the economy is weakening too much for corporate earnings to keep growing.
The latest sign of an economic slowdown came from Roadway Services Inc. and TNT Freightways Corp. -- two big freight transporters. Roadway said it will post a loss in the second quarter and TNT said it expects lower-than-expected earnings because shipments of goods have lagged.
"They both made statements that business stinks, and it's not weather-related," said Bill Langevin, manager of institutional trading at Morgan Keegan Inc. "That points to a real slowdown, and they are barometers of the economy."
The Dow Jones industrial average fell 23.17, to 4,462.03, after being down as much as 35.97 points. The average rose 8.65 Tuesday to an all-time high of 4,485.20 -- its 35th record close this year.
In the 30-stock average, shares of International Business Machines Corp., J. P. Morgan & Co., Merck & Co. and United Technologies Corp. fell the most.
Stocks rallied to record highs through the first five months of this year amid expectations that earnings would continue to grow. Recent reports showing a drop in employment and slower overall economic growth have dimmed that optimism. The Dow industrials have gained 17 percent so far this year.
"People are studying very hard what the economy is doing here," said Ken Ducey, director of trading at BT Brokerage. "Whether it sustains itself is a question."
Among the Dow industrials, shares of General Electric Co. sank 25 cents, to $57.375, after reports that the aircraft engines it is building for British Airways PLC's Boeing 777 jet have technical problems and modifications are needed. Shares of Caterpillar Inc., meanwhile, gained 62.5 cents, to $60.75, after the maker of heavy machinery announced it will boost its quarterly dividend 40 percent, to 35 cents a share, and buy back as much as 10 percent of its stock.
Broader market measures also fell. The Standard & Poor's 500 index slumped 2.42, to 533.13, its second straight drop after closing at a record high Monday. Shares of telephone, utilities and banking companies fell the most.
The Nasdaq composite index, meanwhile, rose as technology stocks rebounded and health issues strengthened. The index gained 2.18, to 881.58, below its all-time high of 882.85 set on Monday. Shares of Microsoft Corp., U.S. Healthcare Corp., Intel Corp. and Oracle Corp. gained.
About 13 stocks fell for every eight that rose on the New York Stock Exchange, where more than 327 million shares traded hands. The three-month daily average on the Big Board is 338.3 million shares.
Concern over the economy was heightened by Federal Reserve Chairman Alan Greenspan. Speaking at a conference in Seattle sponsored by the American Bankers Association, Mr. Greenspan said the probability of a recession has "edged up" and the degree of a slowdown is "pronounced."
Talk of a recession weighed on stocks because equities don't fare well when economic growth stagnates. In the last recession, from mid-1990 through the first quarter of 1991, the S&P; 500 rose just 4.4 percent.
The Morgan Stanley Cyclical index of 30 companies whose profits are tied to economic swings fell 1.89, to 325.78.
The drop was led by auto parts company Dana Corp., down 75 cents to $28; building materials provider Masco Corp., off 75 cents at $28.625; and power systems maker Parker-Hannifin Corp., down 75 cents to $37.50.
The Russell 2,000 index of small capitalization stocks rose 0.12, to 274.81; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 17.04, to 5,217.81; the AMEX market value index rose 0.69, to 488.57; and the S&P; 400 Midcap index dropped 0.43, to 192.47.
The yield on the benchmark 30-year Treasury bond rose three basis points, to 6.54 percent, and the Dow Jones utilities average fell 1.78, to 207.36.