Stocks sag as Nasdaq volume sets record Dow industrials shed 20 points amid some earnings warnings

NEW YORK — NEW YORK -- U.S. stocks tumbled yesterday as the Nasdaq stock market volume set a record, and profit warnings from FTP Software Inc. and Microdyne Corp. fed concern that earnings are weakening at dozens of computer companies.

Rising Treasury bond yields worsened the drop in stocks. An abrupt break in talks between the White House and Congress aimed at balancing the federal budget undermined confidence that interest rates will fall.


The Dow Jones industrial average fell 20.23 to 5,173.84, its first decline this year, as yields on 30-year government bonds rose to 6.04 percent from 5.96 percent.

Two series of computer-guided orders to sell stocks sliced 58 points from the Dow and activated the New York Stock Exchange's limit on program trading.


Almost two stocks fell for every one that rose on the New York Stock Exchange, where volume soared to 512.6 million shares, the fourth most active day in history. Nasdaq volume totaled a record 627 million shares.

On Nasdaq, where benchmark semiconductor and software companies Intel Corp. and Microsoft Corp. trade, the composite index slumped 16.44 to 1,029.82, adding to Wednesday's 12.39-point drop.

At one point, the Nasdaq index had tumbled 24.69, shadowing moves in Cisco Systems Inc., down $2.75 at $70.625; Amgen Inc., $2.50 lower at $55.125; Bay Networks Inc., $2.4375 weaker at $38.25; 3Com Corp., down $2 to $44; and Parametric Technology Corp., down $4.50 at $58.25.

The broader Standard & Poor's 500 index dropped 3.62 to 617.7. Regional and money-center banks were the worst-performing groups after Goldman, Sachs & Co. lowered its investment opinion of banks, joining a chorus of analysts predicting that the stocks won't match last year's home-run gains in 1996.

The Wilshire 5,000 index fell 51.88 to 6,044.01; the Russell 2,000 index dropped 4.44 to 310.77; and the AMEX market value index slid 3.70 to 548.47.

FTP Software, the day's most active stock, was the catalyst for much of yesterday's selling of computer-equipment companies, analysts said. FTP plunged $13.375 to $11.875 as 16.5 million shares changed hands amid concern the company faces several quarters of weak earnings because of competition from Microsoft Corp.

Microdyne Corp., a computer networking company, further sapped investors' confidence by saying it expects its fiscal first-quarter earnings to fall short of the year-ago quarter. Microdyne dropped by more than half, losing $8.25 to $7.

Other companies that either warned of weaker profits or released lower-than-expected results included Systems & Computer Technology Corp., down $2.625 to $14.75; MapInfor Corp., $5.50 weaker at $13.75; and Sunrise Medical Inc., down $2.375 to $16.75.


Among computer makers, International Business Machines Corp. slumped $2.375 to $86.875; Digital Equipment Corp. fell $3.875 to $55.75; Hewlett-Packard Co. dropped $1.875 to $79.75; and Compaq Computer Corp. slipped 50 cents to $46.125.

The Morgan Stanley high technology index fell 13.8 points to its lowest level since Dec. 18 before rebounding to 303.45, down 6.04. Since peaking on Nov. 3, the index has fallen 16 percent.

Citicorp shares slumped $2.875 to $65.375; BankAmerica Corp. shares dropped $1.875 to $63.625; Chase Manhattan Corp. shares fell $2.625 to $58.375; and Chemical Banking Corp. shares slipped $2.50 to $56.25.

Tandy Corp., owner of the Radio Shack electronics chain, fell $4.75 to $35.125. The retailer said it expects 1995 earnings to be lower than analysts' expectations.

A handful of other retail stocks slipped as chains posted dismal sales for December as fierce price cutting during the holiday season failed to boost sales. Gymboree Corp. dropped $2.625 to $14.875; Circuit City Stores Inc. fell 62.5 cents to $27.875; and Limited Inc. fell 50 cents to $16.875.