Stocks Mixed, Bonds Weak Despite Inflation News

Another report showing that inflation has been vanquished failed to excite investors much Tuesday, as stocks closed mixed and bonds weakened.

A midday rally in the Dow Jones industrial average faded in late trading, and the index eased 11.31 points to 7,760.78, its second modest decline after a spectacular six-session surge.

In the broad market, losers had a narrow edge over winners on the New York Stock Exchange and on Nasdaq. But many major indexes still closed higher, in active trading: The S&P; 500 added 0.52 point to a record 894.42. And a continuing rebound in tech shares boosted the Nasdaq composite 11.16 points to a record 1,443.11.

The broad market was in a profit-taking mode despite the relatively benign consumer price index report for May.

Stocks may have been hurt by bonds: The bond market seemed to care more about somewhat surprising strength in industrial production last month. Yields edged higher, with the 30-year Treasury bond ending at 6.71%, up from 6.69% on Monday.

“I’m still pretty bullish,” said Geoffrey Brod, a money manager at Aeltus Investment Management, which oversees $38 billion. “We’ve got a good economy, profits are coming through and the Federal Reserve doesn’t have to tighten” interest rates.

Among Tuesday’s highlights:

* Personal computer-related shares led tech issues higher, after bullish comments about Compaq by a Merrill Lynch analyst. Compaq jumped 2 5/8 to 107 3/4, Dell shot up 5 1/2 to 120 7/8 and Microsoft gained 2 13/16 to 134 3/16.

But Gateway 2000 dropped 3 3/8 to 30 1/4 after warning about flat quarterly sales.

* On the downside, Amgen slid 3 9/16 to 58 9/16 on cautious comments about sales growth in one of its key drugs, Epogen.

* In Mexico City, stocks climbed to new highs, with the Bolsa index adding 16.99 points to 4,276.83.