Stock prices fell Wednesday for a third straight day as traders sold shares of companies that reported or projected less-than-spectacular profits.
The Dow Jones industrial average closed down 25.34 points at 6,036.46, paring an intra-day loss of more than 60 points.
Stocks and bonds improved after word that the U.S. Treasury had auctioned $12.5 billion of five-year notes at 6.325%, the lowest rate since April 24. Yields on the benchmark 30-year Treasury bond, frequently a determinant of consumer and business borrowing costs, slipped to 6.83% from 6.85% late Tuesday.
The sense of relief in the bond market spilled over to stocks, trimming a 2-1 lead of declining issues to advancers to 6-5 on the New York Stock Exchange. Volume was moderately heavy at 439.64 million shares, but up slightly from the 410.68 million of Tuesday.
Broad stock indexes were mixed. The Nasdaq composite index, which flopped around all day, ended up 7.88 points at 1,227.88. The Standard & Poor's 500 composite rose 0.70 point to 707.27. But the NYSE composite fell 0.31 point to 375.91, and the American Stock Exchange market value index fell 2.56 points to 570.73.
Investors dumped a wide selection of mostly blue-chip equities in response to earnings reports, which analysts said have not been strong enough to justify the stock market's lofty valuations.
Even where results were better than a year ago, comparisons with the previous quarter and projections for the fourth quarter have been less encouraging, they said.
"Companies are having problems with their earnings momentum quarter by quarter," said Brian Belski, managing director at Dain Bosworth Inc. in Minneapolis. And because stock prices are high, with the top 100 Nasdaq stocks gaining 38% from its trough in mid-July, "people are looking for a reason to sell," Belski said.
Among market highlights:
* Electronic Data Systems shares fell 11 1/8 to 48 3/8 in leading volume on the NYSE. The computer services company said its third-quarter profit rose 8.4% from a year ago and was in line with expectations but that it expects a weaker fourth-quarter performance.
* DuPont, the biggest loser among the Dow industrials, fell 2 3/4 to 94 1/2, even after the chemical maker reported net earnings of $1.60 a share, up from $1.38 a year ago and above analysts' mean expectations of $1.58, according to First Call Inc. Analysts said that although DuPont's chemical earnings were good, its oil profits were not.
* Eastman Kodak failed to get much mileage out of the 21% increase in third-quarter profit reported last week. Kodak stock bounced 1 1/8 on the news but fell back 1 to 78 on Wednesday.
* Caterpillar, the earthmoving and farm equipment company, last week reported third-quarter net earnings of $1.61 a share, far higher than the $1.38 that analysts had predicted. Investors pushed the stock up 2 1/8 points that day to $76.25, but since then the stock has eased. It gave up 1 1/8 point Wednesday to close at 72.
* Also taking its turn in the blue-chip penalty box was AT&T, which lost 1 7/8 to 37 7/8. Analysts said they were not impressed with the telecommunications giant's naming of John R. Walter, the chairman and chief executive of printer R.R. Donnelley & Sons, as its president and heir to the chairman's job.
* Technology stocks improved after Tuesday's performance, when the Nasdaq average dropped 16.41 points after Microsoft made its earnings report. The results, although strong, were not wildly better than analysts' expectations.
Microsoft and Intel ended higher on Wednesday, with Microsoft up 2 to 134 1/2 and Intel up 3 7/8 to 109 3/8. And Netscape Communications, breaking trend, rose 5 3/8 to 49 7/8 on news of slightly better earnings and quadrupled revenue year-over-year. IBM rose 2 1/4 to 129 1/4.
* Conrail shares ended up 10 7/8 at 95 5/8 after surging more than 12 on Norfolk Southern's offer of $9.15 billion in cash for Conrail. Norfolk's offer threatened to bust up CSX's rival bid for Conrail, which is currently valued at under $8.02 billion.
CSX fell 3/4 to 45 1/2; Norfolk Southern fell 3/8 to 94 1/8.
Meanwhile, heating oil futures fell sharply as refiners apparently bowed to government pressure and began shipping substantial new supplies to the Northeast from other regions of the country. Other energy prices also retreated.
Stocks fell an unexpected 17,000 barrels despite refinery production running at the highest rate in nearly 20 years. But supplies in the East, where 75% of heating oil is consumed, jumped a sharp 2.471 million barrels to 40.7 million, the American Petroleum Institute reported.
Colonial Pipeline's decision to ship heating oil through a Gulf Coast pipeline normally reserved for unleaded gasoline signaled new supplies will get where they're needed, said analyst Gerald E. Samuels at ARB Oil in Los Angeles.
Energy Secretary Hazel O'Leary met last week with oil industry executives in hopes of prodding them into taking voluntary actions to increase heating oil supplies. The move apparently worked, Samuels said.
Heating oil for November delivery fell 2.49 cents to 70.96 cents a gallon.