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Dow down 23.55 Intel rallies while Microsoft drops

NEW YORK — NEW YORK -- U.S. stocks declined yesterday as concern about the earnings prospects for Microsoft Corp. and J. P. Morgan & Co. offset a rally in Intel Corp.

Microsoft's disclosure of a delay in its new operating system, Windows 95, hurt other software makers who were depending on the upgrade to ship products of their own. Intel, meantime, rallied after the chip maker agreed to give any customers who ask new Pentium chips to replace defective ones.

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"Microsoft and Intel are the leaders in the industry in terms of new products," said Philip Tasho, portfolio manager at Shawmut Investment Advisers Inc., which invests $14 billion. "That's why there's so much attention paid to them."

Microsoft and Intel were the first and third most actively traded stocks yesterday. Microsoft fell $2.75, to $59.875, and Intel rebounded $3.4375, to $61.25.

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The Dow Jones industrial average closed down 23.55, at 3,767.15, as losses in J. P. Morgan & Co., Aluminum Co. of America and Bethlehem Steel Corp. overshadowed a gain in Merck & Co.

The Standard & Poor's 500 index eased 0.81, to 457.10. Retailers were among the biggest decliners for a second day amid concern that holiday sales won't live up to expectations.

The Nasdaq combined composite index rose 0.62, to 728.51, buoyed by Intel. The Santa Clara, Calif., chip maker's stock had fallen 11 percent since it disclosed a flaw in Pentium Nov. 25.

Declining stocks were even with advancing ones on the New York Stock Exchange. Trading was active, with about 324 million shares changing hands on the Big Board.

Stock prices were also hurt by weakness in the American depositary receipts of Mexican companies following Mexico's devaluation of its currency.

"The devaluation means the value of those stocks in dollars are down," said Stephen Graham, a research analyst in Latin American utilities for CS First Boston Corp. What's more, "all dividends are now worth about 15 percent less in dollars."

Stock prices briefly pared their losses starting about 2 p.m. EST, after the Federal Reserve's policy panel finished their meeting .. without raising interest rates.

The Federal Open Market Committee has raised the rate banks charge each other for overnight loans -- the so-called fed funds rate -- six times in 1994, bringing it to 5.5 percent from 3 percent.

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Software shares declined after Microsoft said a new operating system for personal computers would be delayed until August.

Many investors had expected Windows 95, the long-awaited upgrade to the Windows and DOS operating programs, to be available next spring. The delay swatted software makers that are developing applications to be used with Windows 95.

Adobe Systems Corp. fell $1.625, to $31.125, and Symantec Corp. shed $1.25, to $16.5625.

The potential market for Windows 95 is enormous. More than 110 million people use MS-DOS worldwide, including about 65 million Windows users. Microsoft is expected to ship as many as 30 million Windows 95 units in the first year, for estimated revenue of about $1 billion.

Steel stocks dropped after LTV Corp.'s plans to build a $450 million mini-mill raised concern that the industry's rush to expand flat-rolled steel production means more competition and mounting costs. Bethlehem Steel fell 87.5 cents, to $18; USX Corp.-U.S. Steel Group Inc. dropped $1.125, to $35.875; and

Nucor Corp. slumped $3, to $54.625.



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