NEW YORK -- Smaller-company stocks rose to record levels for the seventh straight session, but blue-chip shares fell today as some new data contradicted recent signs that inflationary pressures may be easing. Dow drops 41.64
The Dow Jones industrial average fell 41.64 points to close at 7,289.40, weighed down by Procter & Gamble Co., which fell sharply after a downgrade by Smith Barney.
Most broad-market indicators also posted modest losses even as bonds recovered from a morning dip on news of surprisingly robust manufacturing activity in May.
Advancers led decliners by a 3-to-2 margin on the New York Stock Exchange, with 1,543 up, 1,000 down and 812 unchanged. NYSE volume was 432.66 million shares vs. 533.46 million Friday.
The Standard & Poor's 500-stock list fell 1.92 to 846.36, and the NYSE's index dropped 0.24 to 441.54. The technology-heavy Nasdaq composite index -- which on Friday ended slightly lower after tumbling nearly 50 points on a discouraging outlook from Intel Corp. -- rose 4.46 to 1,404.78. The American Stock Exchange index, which is dominated by smaller companies, rose 1.79 to 607.17.
Smaller-company shares continued to outperform the blue-chip sector.
The Russell 2000 list of smaller companies rose 2.76 to close at 383.52, the seventh straight record close for the index.
Today's manufacturing data countered other recent indications that the vigorous economic pace seen in the first quarter may be slowing enough to keep inflation in check without another boost in interest rates by the Federal Reserve.
The central bank moved to ease inflationary demand by raising a key lending rate in late March, but passed on an opportunity to do it again two weeks ago. Investors had been worried that the Fed might slow consumer borrowing too much, hurting company profits.