Rising Interest Rates Spark Big Stock Sell-Off

A jump in interest rates triggered an avalanche of profit-taking Thursday, yanking the Dow Jones industrial average back from its first foray above 6,900 to a loss of nearly 100 points.

Broader stock measures also slid sharply after spending most of the session, the second-busiest in U.S. stock market history, plowing further into record territory.

The Dow, up more than 56 points shortly after 2 p.m., plunged to a loss of nearly 108 points before steadying and closing at 6,755.75, down 94.28, or about 1.4 percent.

The Dow had rallied as a series of impressive earnings reports from United Technologies, McDonald’s and Texaco helped make a vague memory of Wednesday’s disappointment over IBM’s results.

But the day’s momentum died suddenly when bonds turned lower, boosting interest rates, as the market absorbed $12.5 billion in new 5-year Treasury notes from a government auction in the afternoon.

Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where the extremely heavy volume totaled 683.79 million shares as of 4 p.m., an all-time high. The combined volume on all U.S. stock markets totaled 1.647 billion, beating Wednesday’s 1.457 billion and second only to the 1.737 billion traded on July 16 last year.

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

NYSE

PepsiCo, up 3-1/2 at 35-1/2.

The Purchase, N.Y.-based company plans to spin off its $11 billion restaurant business, enabling PepsiCo to concentrate on its beverage business and its Frito-Lay snack food operations.

United Technologies, up 3-1/8 at 69-5/8.

The maker of jet engines, helicopters, elevators and air conditioning systems reported a 22 percent gain in fourth-quarter earnings that beat analyst forecasts.

Texas Instruments, up 7 at 70-3/4.

Taiwan’s Acer Group agreed to purchase TI’s mobile computing business, which includes the TravelMate and Extensa notebook PC lines.

Amphenol, up 2-5/8 at 25-3/4.

Kohlberg Kravis Roberts & Co. agreed to buy a majority stake in the maker of fiber-optic and coaxial cable for about $1.5 billion, or $26 a share.

NASDAQ

Republic Industries, up 1-5/8 at 42-3/4.

Former Blockbuster Entertainment chief H. Wayne Huizenga continued his shopping spree as Republic acquired two electronic security companies for $36 million in stock and assumed debt.

Compuware, up 8-1/8 at 68-3/8.

The software maker reported earnings that beat Wall Street’s expectations for its third quarter ended Dec. 31.