Stocks closed lower as investors' nervousness about inflation and interest rates again overshadowed upbeat earnings news. But Intel got a boost as it and Microsoft were picked as new components of the Dow Jones industrial average.
At the close of trading on Wall Street, the Dow was down 47.80 at 10,302.13, having surrendered an earlier 59-point gain. The blue chips fell 120 points on Monday amid uneasiness over higher rates.
Broader indicators were mixed. The Standard & Poor's 500-stock index was down 11.72 at 1281.91, and the Nasdaq composite index was off 4.48 at 2811.47.
Stocks were hampered by continuing concerns about inflation, especially as the Federal Reserve's next policy-setting meeting approaches on Nov. 16. The jitters have caused investors to look past better-than-expected earnings reports, including news today of strong earnings from Lucent Technologies.
"The market is still under pressure, and the interest-rate question is probably a big part of it," said Charles White, president and portfolio manager at Avatar Associates.
"We need to get some idea of what the Fed will be doing in November," White said. "Until that, the stock market has a very limited upside."
The Federal Reserve Bank president in Richmond, Alfred Broaddus, also cast a pall over the market when he warned that the economy still runs the risk of overheating, despite rising productivity.
"That threw a pail of water on the market," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
Rising yields in the bond market also held stocks back. Analysts said the bond market was depressed ahead of the release later this week of data on the gross domestic product and employment costs.
In late afternoon, the yield on the Treasury's 30-year bond was up to 6.37 percent, from late Monday's 6.35 percent, as the price fell $3.44 per $1,000 invested. In earlier trading, slightly lower yields had helped support stocks.
A Conference Board report of a drop in consumer confidence during October helped the stock market only briefly.
While the market was initially cheered by Lucent Technologies' earnings, stocks were unable to sustain their gains. But Lucent ended the day up 3 at 62 7/8.
Dow Jones & Co. announced that Intel and Microsoft are being added to the Dow, becoming the first Nasdaq stocks ever chosen by publisher of the Wall Street Journal for its blue-chip index. Other newcomers are retailer Home Depot and telephone company SBC Communications.
The new Dow stocks initially rose sharply on the news. But just as interest-rate worries punctured the market's optimism about earnings, they also cut into the four stocks' gains.
Intel rose 3/16, closing at 71-7/16, and SBC was up 1-5/16 at 45-9/16, although Microsoft ended the day down 1/16 at 92 3/8. Home Depot was down 1 1/4 at 70-11/16.