Stock Rally Fizzles; Dow Falls 20.47

IBM’s profit report spurred an early rally Thursday but the advance sputtered, leaving most stock measures little changed as investors began focusing on next week’s barrage of economic data.

Even with the equivalent of a 36-1/2-point booster shot from IBM, the Dow Jones industrial average fell 20.47 to 6,792.25.

Early in the session, it seemed the Dow average had rediscovered Tuesday’s momentum, which produced a 173-point surge. But the Dow quickly surrendered an opening 78-point gain as interest rates rose in the bond market amid worries that next week’s economic reports will intensify the inflation fears that have gripped investors since mid-March.

“It looked like we were back off to the races. But when bonds are under pressure, it’s tough for stocks to rally,” said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.

Broader stock indicators ended mixed, with technology shares and smaller-company issues outperforming the blue-chip sector.

Declining issues outnumbered advancers by a 10-to-9 margin on the New York Stock Exchange, where volume totaled 485.41 million shares as of 4 p.m., almost even with the pace of the prior two sessions.

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

NYSE

IBM, up 11-1/4 at 153-5/8.

As expected, the computer maker reported a small drop in first-quarter profits, but the results exceeded analyst forecasts.

Procter & Gamble, down 2-1/2 at 123.

The consumer products giant’s profit for its third quarter ended March 31 rose 16 percent, beating forecasts by a small margin.

Dow Chemical, up 2-1/8 at 81-7/8.

The company’s first-quarter profit fell 5 percent due to higher raw materials costs and the effect of the strong dollar on overseas sales, but the results beat analyst forecasts by a wide margin.

Computer Associates, up 4-3/8 at 48-1/2.

The software company expects to report better-than-expected results for its fourth quarter ended March 31.

Compaq Computer, up 2-5/8 at 80-1/8.

The world’s largest personal-computer maker announced plans to buy back up to 25 million shares, or 9 percent, of its stock

NASDAQ

Avid Technology, up 5 at 20.

The maker of digital editing tools for film and television made a profit in the first quarter after reporting a loss in the same period a year ago.

Integ, down 3/4 at 4-1/4.

Piper Jaffray downgraded the stock to “buy” from “strong buy.”