NEW YORK -- U.S. stocks posted small losses as concern about rising interest rates and the weak dollar offset strong third-quarter corporate earnings.
Losses in electrical equipment companies such as Raychem Corp. and telephone stocks such as Bell Atlantic Corp. balanced gains in computer makers Sun Microsystems Inc. and Apple Computer Inc.
Rising profits are deflecting some of "the concern about what the Fed is likely to do next month with respect to interest rates or the weak dollar," said Alan Ackerman, market analyst at Reich & Co.
The Dow Jones Industrial Average fell 6.39 to 3917.54, snapping three days of gains. Boeing Co., Walt Disney Co. and General Electric Co. posted the largest losses among the DJIA stocks.
Among broader market measures, the Standard & Poor's 500 index dipped 1.3 to 467.66, its second straight decline. The Nasdaq composite index fell for a third day, dropping 0.97 to 764.81, paced by losses in Oracle Systems Corp., Price/Costco Inc., MCI Communications Corp. and U.S. Healthcare Inc.
More than 13 stocks dropped for every nine that rose on the New York Stock Exchange, where volume grew to 259.7 million shares from 238.4 million.
A host of strong earnings announcements helped stem the market's losses. Sun and Apple's earnings lifted technology stocks, while money-center banks also announced wider corporate profits. General Electric Co., TRW Inc. and Citicorp all said quarterly profits exceeded last year's results.
Of the 140 companies in the S&P 500 that have reported quarterly earnings, 52 percent have been above analysts' expectations, 17 percent have matched forecasts and 37 percent have fallen below.
Not all those stocks rose, in part because of concern earnings growth is peaking and on the verge of slowing. "Earnings are good, but we're not going to see the earnings growth we've gotten used to in the past year," said Rick Martin, head of U.S. equity research at Swiss Bank Corp.
Mr. Martin expects operating earnings, excluding one-time charges or gains, to grow 8 percent next year, down from 13 percent in 1994. "We're well past the peak in earnings growth," he said.
Although corporate profits look fat this quarter, a large part of the gain is attributable to the falling dollar, Mr. Martin said. "These earnings have been artificially inflated" and won't last through next year, Mr. Martin said. A weak dollar boosts profits for U.S. companies when foreign earnings are translated back into dollars.
The dollar's stunted rally yesterday combined with weak bond prices to turn investors against stocks, traders said. "The dollar's not helping much," said Todd Clark, senior trader at Mabon Securities Corp. "The bottom line is it's not good news. It's a global vote against the policies of our government."
A weak dollar leads some overseas investors to shun U.S. stocks because of risks the currency will continue to decline, traders said.
Domestically, the slide has added to investors' conviction the Federal Reserve Board will raise rates at a Nov. 15 policy meeting, largely to dampen inflation but partly to bolster the currency.
Bond prices fell after Federal Reserve Governor Susan Phillips raised concern about inflation by saying the economy's fast growth is surprising analysts. Yields on benchmark 30-year Treasury bonds rose to 7.87 percent from 7.83 percent.
Drug stocks dropped as third-quarter earnings reports pointed to slower growth.