NEW YORK - U.S. stocks fell for a second day yesterday, led by computer issues, after Digital Equipment Corp. warned that its quarterly earnings will be less than analysts had been projecting.
The Dow Jones industrial average ended down 14.09, at 5,655.42, after having been down more than 52 points.
Broad market indexes ended lower, though up from their intra-day lows. The Standard & Poor's 500 index fell 1.71 to 649.98 after falling as much as 6.12 points earlier. The Nasdaq composite index, chock-full of computer-related issues, dropped 10.68 to 1,101.82.
Some 1,202 stocks fell and 1,153 shares advanced on the New York Stock Exchange, where a lighter-than-usual 409.8 million shares changed hands.
Hewlett-Packard Co., International Business Machines Corp. and other makers of personal computers tumbled amid more signs that demand for computers is waning. Digital's report also persuaded some that the economy's revival came too late this quarter to help corporate profits blossom.
Digital Equipment said earnings in its third quarter ending March 31 will not meet the $1.02 a share that analysts expected. On March 1, competitor Compaq Computer Corp. said it would report disappointing first-quarter results because it had to cut prices to boost sales.
The Philadelphia semiconductor index dropped 6.74 to 179.97 and the Pacific Stock Exchange technology index fell 4.36 to 206.46.
Among broad market indexes, the Russell 2000 index of small capitalization stocks fell 0.59 to 328.34; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 17.49 to 6389.24; the Amex market value index rose 2.7 to 567.27; and the S&P; 400 midcap index slid 1.53 to 230.28.
Stocks were also hurt by a report from the Commerce Department that showed retail sales rose at a slower-than-expected 0.8 percent in February.
The results clashed with reports on employment growth and home construction earlier this month that showed vibrant growth.
"People are starting to worry about first-quarter earnings after Digital Equipment fired the warning shot," said Guy Truicko, money manager at Unity Management, which oversees $1 billion in assets.
For the first time in three days, shares of Philip Morris Cos. helped the Dow industrials instead of hurt them.
The tobacco company's shares rose $3.125 to $89.50 after Smith Barney Inc. repeated its "buy" rating on the stock. Concern that smokers' lawsuits would cause profits to suffer had sent the stock down 15.6 percent in the five previous sessions.
Philip Morris is "not terminal," said Stanton Feeley, chief investment officer at SunAmerica Asset Management, which oversees about $2.2 billion. He started buying the shares a couple of days ago because tobacco-litigation scares in the past have proved good times to jump into the stock.
Among computer issues, Digital's stock plunged $11.25 to $56, while IBM fell $4.75 to $117 and shaved about 13.7 points from the Dow industrials. Compaq slid $2 to $38.125; Dell Computer Corp. dropped $1.125 to $32.50; Apple Computer Inc. was off 50 cents at $25.25; and Hewlett-Packard slid $3.625 to $97.625 after being down as much as $7.125 at midday.
Semiconductor shares also dropped. Intel Corp. slid $3.25 to $55.50; Texas Instruments Inc. fell $2.125 to $51.75; Motorola Inc. dropped $1.375 to $55; and Micron Technology Inc. slid 87.5 cents to $32.375.
Uncertainty about the economy's direction hurt shares of railroad, paper, chemical and auto companies those most sensitive to swings in growth.
The Morgan Stanley index of 30 so-called cyclical stocks fell 4.88 to 385.77.
Yesterday's most active stocks in U.S. composite trading were Trimedyne Inc., Intel, Philip Morris, Digital Equipment and Cisco Systems Inc.
Pub Date: 3/21/96