NEW YORK -- U.S. stocks were mixed yesterday as rallies in Microsoft Corp. and First Interstate Bancorp sent the Standard & Poor's 500 index to a record, balancing a drop in many companies whose businesses are closely tied to the economy.
Microsoft surged after the world's largest producer of personal-computer software posted unexpectedly strong fiscal first-quarter earnings. First Interstate climbed 33 percent after Wells Fargo & Co. offered to buy the Los Angeles bank, attempting to form the nation's seventh largest.
Caterpillar slid $2.625, to $51.50, after reporting disappointing earnings yesterday, while Alcoa fell $1, to $50.75, on concern about rising aluminum production.
The Dow Jones industrial average fell 18.42, to 4,777.52, after earlier rising 14.82. Two rounds of computer-guided orders to sell stocks sliced 14.80 points from the average, according to Birinyi Associates of Greenwich, Conn.
The S&P; 500, representing 74 percent of the value of all U.S. stocks, rose 0.66 to its second straight record of 587.44. Regional bank, software, computer, semiconductor and drug stocks added most to the advance.
On the Nasdaq Stock Market, the composite index gained 9.69, to 1,045.13, adding to yesterday's 17.31-point advance. Microsoft, up $4.50, to $95.625, and Intel Corp., Oracle Corp., Cisco Systems Inc. and Sun Microsystems Inc. rose the most.
Fewer than 11 stocks rose for every 10 that fell on the New York Stock Exchange, where volume surged to 411.3 million shares from 352.9 million Tuesday. The Russell 2000 index of small-company shares gained 1.35, to 304.05; the Wilshire 5000 index tacked on 13.32, to 5,820.29; and the Dow Jones utility average added 0.92, to 215.66.
Meanwhile, earnings continued to beat expectations. Of the 191 companies in the S&P; 500 that reported earnings so far this month, 52.9 percent exceeded analysts' forecasts while 35.1 percent fell below estimates.
First Interstate shares soared $34.75, to $140.75, and Wells Fargo jumped $15.375, to $229. San Francisco-based Wells Fargo offered 0.625 shares for every First Interstate share, valuing the Southern California bank at $143.125 a share.
Great Western Financial Corp., a Chatsworth, Calif.-based savings and loan, climbed $1.375, to $25.50, after it said third-quarter earnings rose to 45 cents a share from 38 cents last year.
H.F. Ahmanson & Co., another California thrift, jumped $1.50, to $27.75. Ahmanson, scheduled to release earnings tomorrow, and Great Western were both raised to "buy" from "outperform" at Smith Barney Inc.
The advance in financial stocks wasn't universal. Citicorp shares slumped $3.625, to $69.125, after it was removed from the "recommended list" at Donaldson, Lufkin & Jenrette, and Merrill Lynch & Co. said the New York bank will have a tougher time
beating analysts' earnings forecasts.
Microsoft shares surged after the Redmond, Wash.-based software maker reported -- after the market closed Tuesday -- that its earnings climbed to 78 cents a share, up from 51 cents last year and beating analysts' estimates of 70 cents.
Confidence in the business outlook for Microsoft spilled over to other technology stocks, driving their prices higher.
Bay Networks climbed $1.75, to $63.75, after the maker of computer-network equipment posted better-than-expected fiscal first-quarter earnings.
Sun Microsystems jumped a second day after reporting surprisingly strong earnings late Monday.
Compaq Computer Corp. climbed $2.75, to $54.125. The world's biggest maker of personal computers agreed to buy closely held Thomas-Conrad Corp. to expand its offering of network products.