NEW YORK -- U.S. stocks fell yesterday as optimism for another interest rate cut dimmed. Economically sensitive issues slumped, overshadowing gains in steady-earning food and household product companies.
The Dow Jones industrial average dropped 28.18 to 5,551.37.
Stocks rose and fell throughout the session, sending the Dow industrials up 16.26 at one point. That was partly because of today's "witching," when futures and options on U.S. stock indexes expire simultaneously, traders said.
Economic bellwethers General Motors Corp. and Sears, Roebuck Co. were the biggest decliners among the Dow industrials.
Computer stocks were an exception. International Business Machines Corp. rose $3.375 to $117.625, a five-year high. Gary Helmig, an analyst at SoundView Financial, told customers his 1996 earnings estimate may be too conservative as sales of computers accelerate more than he expected. Soundview specializes in the technology industry.
IBM has surged 34 percent since the computer maker posted a 65 percent surge in fourth-quarter earnings on Jan. 18.
Also among the Dow industrials, McDonald's Corp. added 50 cents to $51. The stock dropped about $4 in two days after Bear Stearns & Co. downgraded the stock. Still, the shares are up 13 percent for the year on the company's better-than-expected earnings and plan to step up global expansion.
The Standard & Poor's 500 index fell 4.26 to 651.32 as telephone, automobile and oil shares fell.
The Nasdaq composite index rose 2.51 to 1,090.54. Oracle Corp., Linear Technology Corp. and Adaptec Inc. gained the most.
Some 1,226 stocks fell and 1,110 stocks rose on the New York Stock Exchange, where 415.3 million shares changed hands. That's above the 374.2 million average daily volume in the past six months.
Companies sensitive to swings in the economy slipped. Sears, Roebuck fell $1.875 to $44.875 and Georgia-Pacific Corp. slipped $1.375 to $67.
Government reports showing a rebound in manufacturing sales and factory orders fueled speculation that the Federal Reserve wouldn't lower interest rates again. The yield on the 30-year government bond -- a harbinger of rate movements -- rose to 6.17 percent, up 8 basis points from Wednesday.
After rising 7.7 percent so far this year, the Morgan Stanley cyclical index dropped 4.41 to 362.06, and the firm's consumer products index fell 1.01 to 302.53.
Deere & Co. fell 87.5 cents to $38.75 after the maker of heavy machinery posted fiscal first-quarter earnings in line with expectations.
Among the consumer product companies that gained, Abbott Laboratories climbed $1.125 to $44 and Crown Cork & Seal Co., maker of metal and plastic soda bottles, rose 87.5 cents to $45.75.
Among broad market indexes, the Russell 2,000 index of small capitalization stocks fell 0.32 to 320.75; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 21.42 to 6,363.88; the American Stock Exchange market value index skidded 0.62 to 560.36; and the S&P 400 midcap index climbed 0.93 to 227.46.
Hewlett-Packard Co. reversed early gains and fell $2.25 to $86.25. Analysts predicted the computer maker would post strong earnings today as sales of servers, printers and personal computers boosted revenue 27 percent. In the last month, the stock jumped 17 percent.
Local telephone stocks continued to drop after surging last week. Investors snatched up the shares, betting that local companies would beat long-distance companies in expanding their services. SBC Communications Inc. fell $1.625 to $55.875 and Ameritech Corp. slipped $2.125 to $60.50.
Royal Dutch/Shell Group, Europe's largest oil company, dropped to $138.25, after the company said profit excluding items fell 24 percent last quarter.