Dow Sheds 19 Points As Investors Get Jitters

Stocks turned mostly lower with bonds Tuesday as enthusiasm about an encouraging inflation report proved fleeting amid uncertainties over upcoming economic data.

The Dow Jones industrial average fell 19.21 to 5,668.66, retreating from an early advance of nearly 41 points.

Most broad-market measures also turned negative as bonds shed early gains inspired by news that wholesale prices fell in May.

The unexpected drop in the producer price index - which had raced ahead at worrisome levels in March and April - muted concerns generated by Friday’s report on May employment.

But by midafternoon, bonds began to slide, sending long-term interest rates back to their highest levels in more than a year.

After the producer price report, the yield on the 30-year Treasury bond - a key determinant of corporate and consumer borrowing costs - edged as low as 7.08 percent. Later, however, the yield moved back above 7.1 percent. Before Friday’s employment report, the benchmark yield had stood at 6.9 percent.

Analysts had few clear explanations for the bond market’s late slide. Some attributed it to inflation jitters before today’s report on consumer price inflation and Thursday’s report on May retail sales.

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

NYSE

Storage Technology, up 3-3/8 at 42-7/8.

The stock rose for a second day after IBM announced a deal to sell Storage Technology’s computer-disk storage systems under the IBM brand name. On Tuesday, Lehman Brothers raised its rating on the stock, Dow Jones News Service reported.

Culbro, up 3/8 at 60-1/4.

The company agreed sell its labeling systems and packaging machinery business, CMS Gilbreth Packaging Systems Inc., for an undisclosed amount to an investor group.

NASDAQ

Tower Semiconductor, down 3-1/8 at 10-7/8.

Data Systems & Software, down 1-1/4 at 6-3/4.

The Israeli chipmaker and Hewlett-Packard terminated their relationship. Last August, the companies agreed to a three-year pact in which Tower would increase its wafer production commitment to Hewlett-Packard. The contract also called for Hewlett-Packard to transfer a wafer-production technology to Tower.

Infoseek, up at 14 from initial offering at 12.

The stock rose in its first day of trading after the provider of access services for the Internet raised about $41.4 million in an initial public sale of 3.5 million shares for $12 each. The company said it will offer another 518,175 shares to cover additional demand for the stock.