Rebounding bond yields drag stocks down a bit

NEW YORK - Stocks closed mixed in uneven postholiday trading yesterday as a rebound in bond yields stifled Wall Street's excitement over buyout activity and strength in the service sector.

The Institute for Supply Management's index of service-sector activity rose to 60.7 in June from 59.7 in May, indicating that nonmanufacturing industries saw slightly faster expansion. The figure was better than expected, fueling sentiment that the economy was recovering from a slow first quarter.

However, the data weighed on bond prices, which already were weak after payroll company Automatic Data Processing Inc. and consultancy Macroeconomic Advisers L.L.C. said the private sector had added 150,000 jobs last month - a good sign that the Labor Department's report today on June nonfarm payrolls will show a solid rise.

As bond prices fell, the 10-year Treasury note's yield shot up to 5.15 percent from 5.04 percent Tuesday, ahead of the July Fourth holiday. On Monday, the 10-year yield had slipped below 5 percent for the first time since early June.

Also hurting the Dow Jones industrial average was General Motors Corp., one of the blue-chip index's 30 components. GM was downgraded by a Bear Stearns Cos. Inc. analyst after the automaker Tuesday posted a 21.3 percent drop in June sales compared with last year. GM fell $1.22, or 3.2 percent, to $36.76.

The Dow fell 11.46, or 0.08 percent, to 13,565.84.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index rose 0.53, or 0.03 percent, to 1,525.40, while the Nasdaq composite index rose 11.70, or 0.44 percent, to 2,656.65.

Many on Wall Street remained confident about stocks amid takeover news. Hilton Hotels Corp. agreed Tuesday to an all-cash buyout from the Blackstone Group L.P. in a $20.1 billion deal, and the chemical company Huntsman Corp. said Wednesday that a privateequity firm had made a cash buyout offer of about $6 billion that trumped last week's bid from a Dutch company.

Light, sweet crude futures bounced back from earlier losses, rising 40 cents to close at $71.81 a barrel on the New York Mercantile Exchange. Unrest in Nigeria, a major U.S. oil supplier, offset a report from the Energy Department showing oil and gasoline inventories had increased last week.

Declining issues outnumbered advancers by a ratio of about 4-3 on the New York Stock Exchange, where consolidated volume came to 2.62 billion shares, up from 1.52 billion shares in Tuesday's abbreviated session.

The Russell 2000 index of smaller companies rose 1.93, or 0.23 percent, to 850.13.

Overseas, the often-volatile Shanghai Composite Index plunged 5.3 percent on worries about government steps to cool down the market and concerns that several new share listings could dampen prices.