NEW YORK -- U.S. stocks fell yesterday amid concern that corporate earnings growth will suffer unless interest rates fall further.
Stocks tracked bonds throughout the day. Prices fell as the yield on the benchmark 30-year government rose as much as 8 basis points to 6.55 percent after a report that jobless claims fell more than expected and comments from a central bank official reinforced expectations that the Fed will be slow to lower rates.
On Wednesday, a retreat in bonds contributed to a late-day plunge in stocks that sent the Dow industrials down 50 points in the last hour of trading.
Another sign that investors don't foresee lower rates soon was that the Dow Jones utilities average sank for a fifth day, dropping 1.88 to 219.40.
A profit warning from LSI Logic Corp. darkened the outlook for first-quarter earnings and sent many semiconductor, computer and software issues reeling. Signs that one of the market's fastest-growing groups is on shaky ground cast doubt on how well other companies are faring so far this year.
The Dow Jones industrial average closed 20.59 lower at 5,485.62, after seesawing up 19.87 and down 44.07. Computer-guided trading contributed to the swings, costing the average 38 points during the day, according to Birinyi Associates Inc.
Mobil Corp. led oil companies higher, rising $1.75 to $109.625. Mobil and British Petroleum Co. said they expect to save $500 NTC million a year by merging their $20 billion European fuels and lubricants operations. BP American depositary receipts, each representing 12 common shares, gained $2.125 to $100.375.
About 1,474 stocks fell and 900 rose on the New York Stock Exchange, where 453 million shares changed hands, about 1 million shares above Wednesday's volume.
Among other indexes, the Russell 2,000 index of small capitalization stocks fell 0.33 to 324.93; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, slid 34.85 to 6,307.25; the American Stock Exchange market value index slipped 4.66 to 562.00; and the S&P 400 midcap index slid 1.95 to 227.86.
IBM fell $5.25 to $122.125, leading the Dow industrials' decline, after AT&T Corp. said it will drop the computer company's service for connecting businesses on AT&T's network to focus on Internet products. The stock had surged 55 percent since Jan. 15 as some analysts raised their earnings estimates and target prices for the company.
The Standard & Poor's 500 index fell 4.32 to 640.43, led by declines in computer, software and semiconductor stocks. The Nasdaq composite index, made up of such computer-related companies as Microsoft Corp. and Intel Corp., fell 7.50 to 1,100.05.
LSI fell $3.875 to $27.625 after the maker of specialty computer chips said first-quarter profits and sales will be weaker than expected because of slacking demand. Merrill Lynch & Co., Bear, Stearns & Co. and Cowen & Co. lowered their ratings on the company.
Among chip and computer shares that lost, Hewlett-Packard Co. fell $2.75 to $100.75; Intel Corp. fell $1.9375 to $58.8125; Digital Equipment Corp. dropped 62.5 cents to $72.625; Texas Instruments Inc. lost $1.75 to $49.875; and Motorola Inc. fell $1.375 to $54.25.
On Monday, Micron Technology Inc. said it won't equip a new $2.5 billion plant in Utah until business conditions improve. That set off a three-day, 8.5 percent decline in the Philadelphia semiconductor index.
The 16-stock index fell 10.27 to 186.18 yesterday, bringing its loss for the year to 7.22 percent. The index increased 19 percent from Jan. 15 to yesterday amid hopes that the group's drop during the last four months overestimated the slowdown in sales.
Until Feb. 14, the average had jumped 3.8 percent this year, boosted by the Fed's rate cut on Jan. 31 and optimism that more cuts would come.
Among utilities that fell, Unicom Corp. fell $1.125 to 432; American Electric Power Co. dropped 87.5 cents to $42.875; and Public Service Enterprise Group Inc. dropped 37.5 cents to $28.125.