NEW YORK -- U.S. stocks closed mixed yesterday, as Advanced Micro Devices Inc.'s release of lower-than-expected quarterly results renewed concern about the strength of third-quarter earnings.
"The AMD results caused investors to reassess whether earnings are going to meet investors' expectations," said Phil Smyth, market analyst at Birinyi Associates Inc.
The Dow Jones industrial average gained 9.50, to 3,587.26, but closed below the session high of 3,599.27, and broader stock indexes fell. The Nasdaq Combined Composite Index slumped 2.57, to 762.27; the Nasdaq 100 Stock Index fell 6.09, to 762.50, and the Standard & Poor's 500 Index declined 0.13, to 461.21.
The American Stock Exchange Market Value Index rose 0.10, to 461.68. Declining common stocks outnumbered advancing issues by a narrow margin on the New York Stock Exchange.
AMD plunged $4.75, to $22, after the company reported third-quarter net income of 61 cents a share, which was below analysts' expectations of 69 cents.
The weakness in AMD's stock filtered into other semiconductor issues, many of which trade on the Nasdaq stock market. CS First Boston cut its investment rating yesterday on 13 semiconductor stocks
Intel Corp. declined $2.75, to $70. Michael Gumport, an analyst at Lehman Brothers, cut his 1994 earnings forecast for Intel to $6.50 a share from $6.80.
Motorola Inc. fell $2.125, to $98.75; Texas Instruments Inc. lost $5.25, to $70.125; National Semiconductor Corp. declined $1.25, to $18.875; and Micron Technology Inc. fell $4.75, to $49.875.
U.S. companies are due to report third-quarter earnings during the next few weeks. Analysts estimate that corporate America's net income would be up about 22 percent on average in the quarter from last year's levels, according to Institu
tional Brokers Estimate System Inc., a unit of Citicorp.
"Until we start seeing some of those earnings, I doubt the stock market is going to do very much," said William Raftery, market analyst at Smith Barney Shearson Inc.
The decline in semiconductor stocks was offset somewhat by a rally in shares of retail companies and relief that the violent revolt in Russia had been quelled.
Retail stocks were soaring on optimism that September retail sales exceeded analysts' expectations.
Johnson Redbook Service, a division of Lynch, Jones & Ryan, said retail sales were up 10.6 percent in September from last year's level.
Kmart Corp. rose 87.5 cents, to $24.875, after an analyst at Sanford C. Bernstein & Co. raised his investment rating on the stock to "outperform." Wal-Mart Stores Inc. gained $1.25, to $26; Dayton-Hudson Corp. advanced $1.75, to $69.375, and Sears, Roebuck & Co. rose $1.625, to $57.625.
Stocks opened higher yesterday morning on relief that the political turmoil in Russia subsided as troops loyal to President Boris Yeltsin subdued rebels occupying the parliament building in Moscow. The news reports sparked a rally in Europe's markets and that strength shifted into the U.S. market. Germany's DAX Index closed 49.01 points higher, or 2.55 percent, at 1,972.73. Britain's FT-SE 100 Index gained 17.5, or 0.6 percent, to 3,085.20, and France's CAC Index advanced 30.11, or 1.4 percent, to 2,158.77.
With Russia quiet, investors turned their attention to the economy. In addition to earnings, they were concerned that long-term interest rates would not fall much further. The yield on the benchmark 30-year Treasury bond hovered at the 6 percent level. As long as rates stay that low, money should continue to flow into the stock market where hopes of higher returns exist.
"But if interest rates rise, the stock market could be in trouble," said Soraya Betterton, a fund manager at GT Capital Management Inc.