New Concerns Stifle Stock Rally

Stocks posted moderate losses on Wednesday, as a surprisingly strong wholesale inflation report from the government resurrected worry about future interest rate increases.

The Dow Jones industrial average, which hit a record high on Tuesday, ended 10.38 lower at 4,038.37, after paring a 20-point drop posted early in the session.

Declining issues led advancers by about 1,151 to 1,003 on the New York Stock Exchange, with 808 unchanged. Big Board volume was moderately heavy at 309.51 million shares as of 4 p.m., down from 346.15 million Tuesday..

Stocks headed lower early in the session, along with bonds, after the Labor Department said wholesale prices climbed 0.3 percent in February, and the Commerce Department said industrial production jumped 0.5 percent. The pricing figures were much stronger than analysts had predicted.

The most troubling figures in the PPI report were a 0.9 percent rise in the price of intermediate goods and a 1.5 percent rise in the price of crude goods.

The data led stock investors to fear that the Federal Reserve might raise short-term rates in a continued campaign against inflation. Higher rates would raise corporate borrowing costs and could depress consumer spending, which would eventually push stock values lower.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Union Carbide rose 1 1/8 to 29 3/4.

The chemical company said its first-quarter profits would exceed analysts’ expectations of 80 cents to $1.10 per share.

Motorola fell 1 3/4 to 56 7/8.

Comcast Corp.’s cellular unit chose rival AT&T Corp. over Motorola to supply it with cellular network equipment, in a setback to Motorola’s expansion efforts. AT&T was down 1/8 at 52.

NASDAQ

Microsoft fell 1 1/4 to 70 1/2.

The software maker said it would provide free licenses of key system management technology in its Windows 95 operating system to PC and system management software vendors.

Nordstrom rose 1 to 38 1/2.

Piper Jaffray upgraded the stock to “strong buy” from “buy” on a price basis, saying the stock is trading near its 52-week low of 36 1/4.

AMEX

UTI Energy rose 5/8 to 4 1/8.

A private investment partnership bought a 53.5 percent stake in the company for $4.50 per share, or $7.8 million, from Bear Stearns & Co.