NEW YORK -- U.S. stocks recovered from a midday plunge yesterday as a rebound in the bond market boosted interest rate-sensitive bank and utility shares. Technology issues slumped on concern that earnings have peaked.
At one point yesterday, stocks posted their biggest decline in more than two months as investors grew concerned that overproduction by computer and semiconductor companies would produce a glut of technology products, resulting in lower prices and sagging profits.
The Dow Jones industrial average fell 3.25, to 4,762.35 after being down as much as 53.11 points. The plunge triggered the New York Stock Exchange's "uptick" rule for the first time since the Dow industrials plunged 133.9 points July 19. Yesterday, shares of Caterpillar Inc., DuPont Co., and Boeing Co. fell the most.
Two times last week, the average fell more than 49 points before paring the loss by day's end.
Today, the 30-stock Dow average was able to regain ground today as AT&T; Corp.'s stock jumped $1.75, to $65.875, its highest since 1984. The telecommunications company announced plans to cut jobs and shift corporate workers throughout the company as part of a previously announced split.
The broader Standard & Poor's 500 index also rebounded, closing down 0.37, at 581.04, after dropping 6.73, to 574.68. The index closed at a record 586.77 on Sept. 20.
The Nasdaq composite index, filled with technology stocks, fell 11.51, to 1,026.54. Shares of Cisco Systems Inc. weakened $1.625, to $68; Intel Corp. fell 37.5 cents, to $59.3125; 3Com Corp. fell $1.25, to 44.25; and Bay Networks Inc. dropped $2.375, to $52.
With a clouded outlook for earnings, investors bought shares of utility companies, betting that if stocks tumble, the companies' big dividends would be more highly valued than they are now. The Dow Jones utilities average rose 1.19, to 212.5, its highest since March 1994.
Also helping utilities were such recent announcements as Baltimore Gas & Electric Co.'s $2.9 billion planned purchase of Potomac Electric Power Co. earlier this week.
Among utilities, Peco Energy Co. rose 62.5 cents, to $28.50; Southern Co. rallied 50 cents, to $23; Entergy Corp. jumped 37.5, to $25.25; and Houston Industries Inc. rose 25 cents, to $44.50.
More than two stocks fell for every one that rose on the New York Stock Exchange, where more than 411 million shares changed hands. It was the most active day since Sept. 15, and volume eclipsed the Big Board's three-month daily average of 340 million shares.
Among broad market indexes, the Russell 2000 index of small capitalization stocks fell 3.11, to 305.85; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, slipped 17.5, to 5,757.45; the Amex market value index dropped 1.88, to 540.65; and the S&P; 400 midcap index slid 0.88, to 213.19.
Yesterday's most active stocks in U.S. composite trading were Intel Corp., AT&T; Corp., Micron Technology Inc., Microsoft Corp. and Cisco Systems Inc.
Stocks regained ground as U.S. bonds erased a loss as a favorable note auction. Bonds pared their early loss after the Treasury sold $11.5 billion of five-year notes at a lower-than-expected yield, allaying concern the government's auctions this week would help derail the bond market's rally.
Banks stocks gained as the lower interest rates gave rise to optimism that companies' profit margins won't narrow.
Shares of Citicorp rallied $2, to $70.875; BankAmerica Corp. surged 75 cents, to $59.50; Chemical Banking Corp. jumped $1.125, to $60.125; Chase Manhattan Corp. gained 62.5 cents, to $60; and J. P. Morgan & Co. rallied 62.5 cents, to $77.375.
Hayes Wheels International Inc. rallied 62.5 cents, to $26.50. The maker of wheels for cars and light trucks said it agreed to be acquired by Varity Corp. for $25 a share.