NEW YORK -- A dip in interest rates assuaged Wall Street Wednesday, sparking a burst of buying and sending stocks moderately higher. Tech shares, however, declined on disappointing earnings from Cisco Systems.
Analysts attributed much of the advance to a surprisingly strong response to the Treasury's sale of five-year notes, which drove bond prices higher and yields lower. The Dow Jones industrial average rose as much as 98 points before giving back some of its gains.
"The concern was that we were having higher interest rates in general, which were hurting the mortgage rate and stirring fears of less consumer spending," said Brian Williamson, an equity trader at The Boston Co. Asset Management. "But the five-year auction in the Treasuries went pretty well, so people are getting a little excited."
The Dow Jones industrial average closed up 25.42, or 0.3 percent, at 9,061.74, having fallen 149.72 the previous session. Earlier in the day, the blue chips fell as much as 39 points to 8,997.11; the last time they fell below 9,000 in intraday trading was July 17.
The broader market finished mixed. The Nasdaq composite index fell 20.82, or 1.2 percent, to 1,652.68. The Standard & Poor's 500 index rose 1.62, or 0.2 percent, to 967.08.
Cisco slid $1.21 to $17.65 after the networking equipment giant reported a jump in quarterly earnings that met but did not beat analysts' expectations.
Stocks have lurched up and down in recent weeks as investors, having sent prices surging since mid-March, wonder whether the recent rally might have come too quickly. Analysts say it will be difficult for the market to continue a significant advance in the absence of economic or profit news pointing to strong growth.
Investors also have been skittish about interest rates, which have been rising in the past month following remarks by Federal Reserve Chairman Alan Greenspan that many believe signaled a less aggressive Fed stance toward keeping rates low.
"That kind of a put a lid on how high the market could go," said Paul McManus, senior vice president and director of research at Independence Investment LLC. "The thing that would really help the stock market is if the Treasury bond rallied. If economic activity keeps inching up, that would also be a positive."
Tim Smalls, a managing director at SG Cowen Securities, agreed.
"We've got a very mixed market. I think buying will be very selective in the next few weeks," he said. "Investors are looking to buy good stories, good scenarios. We're still at a mid- to high trading range."
Lehman Brothers, which advanced $1.85 to $62.65, after Merrill Lynch raised the investment bank's stock rating to "buy" from "neutral," citing undervaluation.
Verizon rose $1 to $36.05 after the regional phone call continued talks for a ninth day under a federal mediator with the company's workers, who remained on the job without a contract.
Decliners included Weight Watchers, which fell $1 to $42.30, after the weight loss company reported second-quarter profits that beat expectations by a penny but also lowered its 2003 earnings estimate, citing sluggish growth at its North American outlets.
Advancing issues finished even with decliners on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, fell 3.54, or 0.8 percent, to 453.91.
Overseas, Japan's Nikkei stock average finished 0.6 percent lower Wednesday. In Europe, France's CAC-40 fell 1.9 percent, Britain's FTSE 100 declined 1.2 percent and Germany's DAX index dropped 1.8 percent.
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