Stocks sagged Tuesday under the weight of disappointing corporate earnings and worries about rising interest rates.
At the same time, long-term Treasury bond yields rose after the market swallowed $17.25 billion in new two-year notes. Unimpressive quarterly results from a few blue chip companies depressed the Dow Jones industrial average, which finished off 6.16 points at 3,735.68.
Losers led gainers by about 5 to 4 on the Big Board, where the trading pace remained sluggish. New York Stock Exchange volume came to 231.14 million shares, compared to Monday's even lighter 213.47 million.
However, Mexican stocks surged to their highest level in six weeks amid optimism that second-quarter earnings for leading companies will meet expectations. The Bolsa average climbed 79.46 points to 2393.40.
"With the positive earnings news of Telmex, Grupo Carso and other companies," investors bought shares of other companies that will report second-quarter earnings later this week, said Al Hassinger, a trader at Abaco International.
Other foreign markets also closed higher. In Frankfurt, the 30-share DAX average ended up 15.74 at 2,151.96, while Tokyo's 225-share Nikkei average closed at 20,345.37, up 47.71 points. London's Financial Times 100-share average rose 11.1 points to 3,117.2.
The downturn on Wall Street coincided with an uneasy atmosphere in the bond market as the Treasury sold $17.30 billion in two-year notes. The market failed to improve much in the afternoon even though demand for the new paper turned out to be slightly better than expected.
Weighing down bonds were lingering concerns that today's auction of five-year notes might get a cool reception, which would tend to push interest rates higher. The fact that the calendar is crowded with Treasury debt sales in the near future added to the anxiety.
The yield on the key 30-year bond rose to 7.54% from 7.52% on Monday. Its price dropped 3/16 point, or $1.88 per $1,000 in face value. Yield and price move in opposite directions.
But prices of shorter-term maturities were unchanged to 1/32 point higher, and intermediate securities fell between 1/32 point and 1/8 point, the Telerate Inc. financial information service said.
While watching the edgy bond market, equity investors monitored corporate earnings reports. Three stocks that are components of the Dow industrial average--Boeing, Chevron and Eastman Kodak--were among the issues that suffered earnings-related setbacks.
Among the market highlights:
* Digital Equipment rose 1 to 19 3/4 after reporting a fourth-quarter loss but vowing to claw back to profitability by the end of the calendar year.
* Boeing fell 7/8 to 45 1/8 after posting a 48% drop in its second-quarter profit due to sharply lower sales. It said commercial jet deliveries are expected to remain low through 1995.
* Chevron took a hit in heavy turnover, falling 3/8 to 43 after posting a low profit.
* Results from Eastman Kodak came in close to predictions, but the stock still tumbled 1 5/8 to 47 7/8 in active Big Board volume.
* Insurer Lincoln National tumbled 4 5/8 to 38 1/4 on disappointing results.
* Computer chip maker Cirrus Logic rose 2 to 27 7/8 after reporting a sharp rise in its first-quarter profit.
* Seagull Energy fell 1 1/2 to 24 3/8. Goldman Sachs downgraded its rating on the stock to "market performer."
* Software company Powersoft slid 7 1/2 to 43 in heavy Nasdaq trading after company officials said third-quarter earnings would be even or below those posted in the second quarter.
"There's just nothing compelling to make investors either buy or sell, and as a result they're doing nothing," said Dennis Jarrett, chief market analyst at Kidder Peabody.
With the likelihood of the year's fifth Federal Reserve Board hike in short-term interest rates hanging over the market, no one is feeling too adventurous, analysts said.
"Investors are not really expecting a lot out of the stock market right now," said James Walline, vice president of equities at the Lutheran Brotherhood investment firm. "I think they're biding their time."
Worries about rising lending rates, coupled with the steady stream of quarterly earnings reports, kept traders focused on single stocks rather than broad trends, analysts said.
"You're just in there trying to cherry-pick the ones that can do well and just trying to avoid getting swamped by macro-trends that you have little or no control over," said Douglas Myers, vice president of trading at Interstate/Johnson Lane.
Meanwhile, the dollar ended mostly lower against key currencies in a second consecutive session of quiet trading.
In New York, the dollar was quoted at 98.28 Japanese yen, down from 98.75 on Monday. It also fell against the German mark, ending at 1.584 marks, down from 1.590.
In the commodities market, platinum futures prices shot to their highest level in more than 3 1/2 years on forecasts for strong Japanese demand and worries about supply disruptions in South Africa and Russia, the two largest producers.
Platinum for October delivery surged $9.40 on the New York Merc to $430.50 an ounce, the highest settlement for near-term deliveries since November, 1990. September palladium rose $4.15 to $153.95 an ounce.
Gold prices also advanced. On New York's Commodity Exchange, gold rose $2.20 to settle at $387.10 an ounce.
On other commodity markets, crude oil futures fell; coffee weakened; grains and soybeans were mostly higher; livestock and meat futures ended mixed.
Market Roundup, D6