NEW YORK -- U.S. stocks were mixed yesterday as oil issues slumped for a second day, offsetting gains in the shares of steady-earning beverage and drug companies.
Stocks of oil producing companies slid amid concern that the Organization of Petroleum Exporting Countries will boost production next year. Supplies of oil from outside the 12-nation group have hit record levels, leading some investors to speculate that OPEC will increase production to meet the competition.
"OPEC is talking about trying to regain market share,which means more production, more supply, and lower prices," said Kevin Means, chief equity officer at Aetna Life Insurance and Annuity Co. in Hartford, Conn., which manages $20 billion in assets. "The market is a discounting mechanism."
The Dow Jones industrial average fell 3.46, to 4,547.10, its second straight decline after rising six sessions in a row. Gains in J. P. Morgan & Co., Merck & Co. and Aluminum Co. of America offset drops in Caterpillar Inc., DuPont Co. and United Technologies Corp.
Stocks were also held back by concern that the Federal Reserve won't lower interest rates fast enough to expand the economy and stimulate corporate profits, traders said.
Alan Greenspan, the Federal Reserve Board chairman, said in a speech Tuesday night that the forces driving U.S. inflation "are very clearly easing" and there is "an increased risk of a modest near-term recession." Yet he gave no clear signal that interest rates will come down at July's meeting of the Federal Open Market Committee. Expectations of a rate cut then have driven stocks to record highs this month.
"Investors were all hoping he'd indicate rates would go lower, and he didn't say that at all," said Jack Baker, managing director for listed trading at Furman Selz Inc. "What he said is July's not the time."
Among oil issues, Exxon slid 87.5 cents, to $69.25; Chevron dropped 62.5 cents,to $46.75; Amoco Corp. slipped $1, to $66.75; Mobil Corp. faded $1.625,to $96.625; Anadarko Petroleum Corp. fell $2.125,to $43.125, and Amerada Hess Corp. closed down $1.25,at $49.25.
Shares of Caterpillar, the leading decliner among the Dow industrials, fell $1.375, to $62.75,after losing 87.5 cents Tuesday. The Wall Street Journal reported that excess inventory and falling orders at the end of last month have investors and analysts worried.
Among broad market indexes, the Standard & Poor's 500 index fell 1.0, to 543.98, as gains in drug, beverage and health care companies -- companies whose products and services are in demand no matter how the general economy fares -- helped to offset the losses in oil issues.
The Nasdaq composite index fell 0.64, to 929.19, only its third drop in the last 16 sessions. The index soared 7.75 points Tuesday and 13.45 Monday. Drops in Microsoft Corp., Intel Corp., Cisco Systems Inc. and Novell Inc. paced the decline yesterday as the seven-month rally in technology stocks faltered.
About 11 stocks rose for every 10 that fell on the New York Stock Exchange, where more than 398 million shares traded hands. The three-month daily average is 338.1 million.
Among the biggest gainers in the S&P; 500 was Coca-Cola Co., which jumped 75 cents, to a record $64. The soft drink and food company expects international shipments of beverages to rise in the second quarter by 11 percent to 12 percent, up from 7 percent a year ago, according to Salomon Bros. Inc.
"These results bode well for the company because they give Coca-Cola enormous flexibility in managing volume and profits," analyst Andrew Conway told clients yesterday. Shares of rival PepsiCo Inc. rose as much as 50 cents,to $47.375, before closing unchanged.
Whirlpool Corp. said it expects second-quarter earnings to sink about 36 percent, partly because of slower consumer spending. Concern about profit growth sent the appliance-maker's stock down $2.625,to $53.375.
The Russell 2000 index of small capitalization stocks rose 0.21, to a record 282.75; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 2.84, to 5,338.33; the Amex market value index fell 1.01, to 494.07, and the S&P; 400 midcap index rose 0.01, to a record 198.03.