Weak technology sector hurts stocks Dow off 12.42

NEW YORK — NEW YORK -- Signs that earnings are deteriorating at computer and electrical-equipment companies -- bellwethers for the market -- helped drive stocks lower yesterday.

"Technology stocks are getting killed, and it's taking the entire market lower," said Richard Meyer, head of institutional trading at Ladenburg, Thalmann & Co.


The Dow Jones industrial average fell for a fourth straight session, declining 12.42, to 3,193.32. International Paper, Minnesota Mining & Manufacturing and Westinghouse Electric accounted for much of the slide. Computer-driven sell orders knocked about 10 points off the index, said Birinyi Associates Inc., a research firm that tracks computer-driven trading.

The NASDAQ Combined Composite index fell 6.94, or 1.1 percent, to 627.07, dragged down by Microsoft, Novell, Oracle Systems and Intel. The over-the-counter index is down 1.6 percent in the past two days.


The Standard & Poor's 500 index fell 1.41, to 419.27. Declining stocks outnumbered advancing issues by more than 8-to-6 on the New York Stock Exchange. Trading was moderate, with about 187 million shares changing hands on the Big Board.

Computer systems and computer software stocks were down the most," Mr. Meyer said. "The problems started with AMP, and now they've shifted to Molex Inc."

AMP's stock plunged Monday after the company said fourth-quarter results would be below third-quarter results because of weak sales in Europe. Yesterday, Molex fell $2.75, to $34, on a similar announcement.

"People are starting to focus on bad earnings, and most of those disappointments are turning up in the computer industry," said James Davila, vice president in trading at Mabon Securities.

Analysts are pointing to concerns about industry competition and weak economies in Europe as reasons why earnings might not meet investors' expectations. "It appears that technology stocks may have already peaked, and many investors are reducing positions now in order to lock in profits," Mr. Davila said.

Among technology stocks, Borland International fell $4, to $24.75,after Lehman Brothers became the latest firm to lower its rating of the computer-software company. Adobe Systems slumped $2.625, to $32.25, on concerns about how it plans to market its new Carousel software. Microsoft fell $2.75, to $90; Digital Equipment declined $1, to $32.75; and International Business Machines fell 62.5 cents, to $64.125.

"The problem is mainly Europe," said Thom Brown, managing director at Rutherford, Brown & Catherwood. "Any company that derives a clump of sales from Europe is going to encounter earnings problems. Europe is sick, and it isn't getting better."

German economists said this week that economic growth is flat in western Germany. At the same time, some economists said, because of inflation concerns, it is unlikely the Bundesbank will cut interest rates.