Market ends mostly lower on rate-hike concern; Dow up


Posted at Jun 11 2008 06:38 AM | Updated as of Jun 11 2008 02:38 PM


NEW YORK - Wall Street mostly sagged on Tuesday as concern that interest rates will climb hurt technology shares, but the Dow managed to close on the positive side after an upgrade of Coca-Cola Co shares.

Energy stocks were a drag on the S&P 500 as U.S. crude oil futures fell $3 a barrel. The S&P index of energy shares was down 2.2 percent.

Growth-sensitive sectors such as chip makers and software developers were trading lower after Federal Reserve Chairman Ben Bernanke said on Monday evening that he would strongly resist rising inflation expectations, which investors took to mean policy makers would lift rates. Higher borrowing costs are seen as negative for stocks since they impede business investments.

"Bernanke is closing the door to more rate cuts," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.

The Dow Jones industrial average was up 9.44 points, or 0.08 percent, at 12,289.76. But the Standard & Poor's 500 Index was down 3.32 points, or 0.24 percent, at 1,358.44. The Nasdaq Composite Index was down 10.52 points, or 0.43 percent, at 2,448.94.

The Philadelphia Stock Exchange index of semiconductors fell 1.7 percent as all but two of its 18 components traded lower. Marvell Technology Group was the sharpest decliner, falling 5.2 percent to $16.10 on the Nasdaq.

Design software maker Adobe Systems Inc fell 1.7 percent to $41.74 on the Nasdaq.

But Apple Inc helped stem declines in the tech-centric Nasdaq. The computer maker's stock gained 2.2 percent to $185.64 a day after the introduction of a faster iPhone. Earlier Tuesday, Lehman Brothers and Citigroup raised their price targets on the stock.

Coca-Cola shares rose 3.9 percent to $58.01 after a brokerage upgraded the stock, saying the company will benefit from international sales even as the domestic market weakens. Shares of rival Pepsico Inc gained 3.4 percent to $67.58 after it said it will affirm its 2008 profit outlook.

Among energy stocks, Exxon Mobil Corp shares were the top-weighed drag on the S&P, slumping 1.3 percent to $87.89, and Chevron Corp lost 2.4 percent to $98.78. Occidental Petroleum Corp fell 3.9 percent to $89.87.

Shares of investment bank Lehman Brothers continued their sharp descent on Tuesday, falling 6.7 percent to $27.50. The shares are down 20 percent from Thursday. On Monday, the investment bank raised dilutive capital and warned of a $2.8 billion quarterly loss.

Volume was moderate on the New York Stock Exchange, where about 1.39 billion shares changed hands, below last year's estimated daily average of 1.90 billion shares. On the Nasdaq, about 2.08 billion shares traded, below last year's average of 2.17 billion.

Decliners outnumbered advancers by about 2 to 1 on the NSYE and about 4 to 3 on the Nasdaq.