Dow Skids 43.72 Points As Bond Prices Drop

Stocks fell in the final minutes of Wednesday’s session as investors took testimony by Federal Reserve Chairman Alan Greenspan as a sign the central bank will not lower interest rates soon.

The Dow Jones industrial average closed down 43.72 points at 5,626.88 after meandering for most of the session at moderately lower levels.

Decliners overtook advancers late in the day on the New York Stock Exchange, but not by much, leading by 6 to 5 as the market closed. Volume on the floor of the Big Board was moderately heavy at 402.84 million shares as of 4 p.m., up slightly from Tuesday’s pace.

The big problem in the stock market was bonds, which sank precipitously late in the session. The benchmark 30-year Treasury bond was down 1 7-32 points late in the day, pushing its yield, which rises when prices fall, to 6.68 percent.

Bonds fell after traders pored over Greenspan’s testimony to the House Budget Committee, in which he said “the current economic expansion seems to have staying power.”

James Solloway, research director at Argus Research, said bond investors concluded that meant the Fed is “not in any hurry to change interest rates.”

Some of the stocks that moved substantially Wednesday:

NYSE

Bay Networks rose 1-1/2 to 30.

On Tuesday, Donaldson Lufkin Jenrette upgraded the computer networking company’s stock to outperform from market perform, and Morgan Stanley & Co. raised it to strong buy from outperform.

EMC Corp. rose 1-5/8 to 21-1/2.

The stock is replacing Cray Research in the Standard & Poor’s 500 Index.

Morgan Stanley rose 5/8 to 51-3/4.

The New York brokerage firm said its first-quarter net income rose to $1.64 per share, up from 40 cents a year ago. The year-ago results exclude a one-time charge of $39 million for costs connected with Morgan Stanley’s move to new headquarters.

NASDAQ

Apple Computer rose 1-3/8 to 25-1/4.

The stock rose even after the computer maker said it expects to lose about $700 million in the current quarter after writing off millions of dollars in unsold inventory and paying for job cuts. The figure released Wednesday far exceeded Wall Street’s most dire expectations.

AMEX

IntelCom Group Inc. rose 1-1/2 to 16-7/8.

A subsidiary of the competitive local exchange carrier and Southern California Edison is seeking permission for IntelCom to lease fiber-optic facilities from the utility company, to expand its fiber network.