US stocks ended lower Tuesday, with technology issues suffering the biggest declines as bond yields climbed and initial enthusiasm for America Online's takeover of Time Warner waned.
"The long bond's yield is a continued problem -- I think that is the excuse for the selling today," said Guy Truicko, portfolio manager, Unity Management, in Garden City, New York. "It also seems like investors are rethinking the AOL-Time Warner deal and are concluding it is not so great for AOL. I think there is kind of a blow-off in technology as a result."
The Dow Jones Industrial Average dropped 61.12 points, or 0.53 percent, to 11,511.08, as it reversed direction after reaching an intra-day record high of 11,663.10 earlier in the day.
Among those leading the Dow decliners were Microsoft (MSFT), which lost 2 7/8 at 109 3/8 and computer maker Hewlett Packard (HP), down 2 5/8 at 108 3/8.
The Nasdaq Composite Index slid 127.81 points, or 3.16 percent, to 3,921.86, a day after recording its biggest single-day points gain ever.
Pressuring stocks was a rise in the yield on the benchmark 30-year Treasury bond to 6.68 percent from 6.58 percent at Monday's close, as fears intensified that an inflation-wary Federal Reserve could push up US interest rates several times this year.
Banks, biotechnology companies, auto producers, and home builders dropped while specialty healthcare, gold, retail drugs, and office equipment makers gained.
Internet, media, and entertainment stocks gave up part of the gains accrued a day before on euphoria over the mega-merger of AOL and Time Warner. Time Warner (TWX) was down 5-5/16 at 84-3/4, while AOL (AOL) fell 6 to 6.
Internet media portal Yahoo (YHOO), a solid gainer on Monday, was off 38-11/16 at 397-3/8. The company was scheduled to report earnings after the close.
"I think the market is saying: 'The AOL-Time Warner deal is in the market so now let's go to what is really going on,'" said Chris Dickerson of Global Market Strategists. "With market valuations so stretched, there is no way the stock market can ignore interest rates, which continue to rise."
The broader S&P 500 ended down 19.01 points, or 1.30 percent, at 1,438.59.
