NEW YORK — NEW YORK -- U.S. stocks tumbled yesterday for the second time in three days on concern that a delay in balancing the federal budget could prevent interest rates from falling further. Shares of tobacco and food companies paced the decline.
Stocks plummeted 15 minutes before the close, sending the Dow Jones industrial average down more than 50 points, after budget talks were called off in Washington. Failure to agree on a budget could stunt profit growth, investors said.
The Dow industrials closed at 5,059.32, down 50.57, after ceding a gain of 30.7 points earlier in the day. The decline came two days after the 30-stock average tumbled 101.52 points, or 1.9 percent, its biggest percentage drop in more than a year. Then on Tuesday stocks pushed higher on word that the Federal Reserve's policy-making panel had cut a key overnight lending rate to 5.5 percent from 5.75 percent.
Stocks were spurred lower yesterday by a wave of
computer-guided "sell" orders. Shares of Philip Morris Cos., Coca-Cola Co., International Business Machines Corp. and General Electric Co. fell the most.
The Standard & Poor's 500 index fell 5.99 to 605.94 after gaining 2.34 points earlier. The reversal came as shares of chemical companies, automakers and airlines -- companies whose businesses are closely tied to swings in the economy -- pared gains.
A drop in bonds accelerated the stock slump. The yield on the benchmark 30-year Treasury bond rose as high as 6.13 percent. Higher yields hurt stocks by boosting the attraction of fixed-income investments.
The Nasdaq composite index, filled with companies that make computers and software, dropped 1.14 to 1,025.27. Shares of Microsoft Corp. dropped $3.75 to $87.125; Cisco Systems Inc. slid $4.25 to $74; and Oracle Corp. slid $1.75 to $43.
More than 444 million shares traded on the New York Stock Exchange. Advancing stocks outpaced decliners by about seven five on the Big Board.
Among broad market indexes, the Russell 2,000 index of small-capitalization stocks rose 2.83 to 308.83; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 27.95 to 5,943.05; the Amex market value index rose 2.89 to 534.50; and the S&P; 400 midcap index rose 0.61 to 212.45.
Among the day's gainers, Boeing Co.'s shares jumped for a second day. The stock closed up $2.625 at $78 after climbing $2.50 Tuesday, when it announced increased production of four plane models because of growing demand for aircraft.
The Morgan Stanley index of 30 consumer stocks fell 3.06 to 279.94, as PepsiCo Inc. fell $2.375 to $54.75; Philip Morris tumbled $3.50 to $86.375; and Coca-Cola Co. gave up $3 to $74.25.
The S&P; auto index, which had been 6.4 points, closed at 235.68, up 2.41. General Motors Corp. rose 37.5 cents to $50.875; Ford Motor Co. rose 50 cents to $29.125; and Chrysler Corp. gained 62.5 cents to $54.50.
Federal National Mortgage Association closed up 75 cents at $114.625 after being up $2.50; Federal Home Loan Mortgage Corp. gained 75 cents to $79.50 after rising $1.75; and MBNA Corp. added 75 cents to $35.75.
The Dow Jones transportation average rose 11.01 to 2,008.38. Shares of USAir rose 12.5 cents to $13.25; UAL Corp. jumped $1.25 to $198; Delta Air Lines Inc. spurted $1.875 to $77; and AMR Corp. added $2 to $76.125.