NEW YORK — NEW YORK -- U.S. stocks were mixed yesterday as computer and software shares dropped on more signs that slackening demand is causing profits to suffer. Bank shares helped offset the decline.
In the past week, technology companies ranging from Digital Equipment Corp. to tiny Micros Systems Inc. have warned that earnings this quarter will be disappointing. Sales are slowing because fewer computer users are upgrading their systems, and many may choose to wait for a year or two, analysts said.
"Many businesses and consumers have all the firepower they need. That's an underlying issue in the industry," said Eugene Grandone, senior investment counselor at Northern Investment Counselors, which oversees $6 billion.
The Nasdaq composite index, full of computer-related stocks, dropped 15.13 to 1,087.10, its lowest since it hit 1,073.05 March 12. The Standard & Poor's 500 index fell 0.59 to 650.03, its fourth drop in five sessions.
The Dow Jones industrial average rose 7.22 to 5,643.86 after being down about 17 points with a half-hour of trading left. International Business Machines Corp. was the day's biggest loser, falling $5.75 to $108.50 and shaving 17 points from the average. Among the gainers were Texaco Inc. and Exxon Corp.
Some 1,168 shares fell and 1,122 rose on the New York Stock Exchange, where 337.42 million shares changed hands. For the fourth straight session, volume was below the three-month daily average of 418.8 million shares.
Among broad market indexes, the Russell 2000 index of small capitalization stocks fell 1.76 to 327.72; the Wilshire 5,000 index, composed of stocks on the New York, American and Nasdaq stock exchanges, fell 13.87 to 6,381.22; the American Stock Exchange market-value index dropped 1.57 to 567.78; and the S&P; 400 Midcap index slid 1.45 to 228.9.
Yesterday's most active stocks in U.S. composite trading were Cisco Systems Inc., Kmart Corp., Solv-Ex Corp., Intel and Glaxo Wellcome Plc's American depositary receipts.
The Morgan Stanley High Tech index fell 8.53 to 309.55, bringing its loss for the past month to 11 percent.
Among computer and software stocks, Hewlett-Packard Co. dropped $2.75 to $94.25; Dell Computer Corp. fell $1.375 to $31; Compaq Computer Corp. slid $1.125 to $36.625; Microsoft Corp. slumped $1.25 to $99.875; and Computer Associates International Inc. shed $1.75 to $68.
Santa Clara, Calif.-based networking company 3Com Corp. wasn't spared, even though its fiscal third-quarter earnings beat expectations by a penny. The stock fell 62.5 cents to $41.375.
Helping fuel losses in computer stocks was a Wall Street Journal article that said companies are buying fewer computers and related equipment as they focus on other capital spending needs. Since telling investors Wednesday that earnings would be below expectations, Digital Equipment's stock is down about 40 percent. Yesterday, it fell $2.25 to $52.125.
Shares of railroad companies backtracked after Wisconsin Central Transportation Corp. said first-quarter earnings will disappoint, partly because shipments of chemical and grain products fell. Investors had hoped a rebounding economy would cause a pickup in shipping traffic and boost the companies' earnings.
The S&P; rail index, which had been up 5.9 percent in the two weeks ended Friday, slid 15.01 to 521.28, its lowest since March 13. The Dow Jones transportation average fell 27.05 to 2,170.62 and is now down 2 percent from its record 2,215.21 a week ago.
Among rail issues, Wisconsin Central slid $3.75 to $67.25; Conrail Inc. gave up $2.75 to $72; and Burlington Northern Santa Fe dropped $2.50 to $82.50.
Tempering the losses, interest-rate-sensitive bank and utility shares rose as the yield on the benchmark 30-year Treasury fell 7 basis points to 6.57 percent. Signs that the economy's expansion is moderate enough to prevent inflation from accelerating helped bonds gain.
The Keefe, Bruyette & Woods bank index of 24 stocks rose 4.54 to 432.57. As borrowing costs fall, profits for lenders and big borrowers alike tend to rise.
Wells Fargo & Co. rose $3.375 to $251.875; NationsBank Corp. gained 62.5 cents to $75.875; BankAmerica Corp. rose $1.125 to $76.875; Suntrust Banks Inc. added $1.125 to $72.50; Banc One Corp. rose 75 cents to $36.50; and Mellon Bank Corp. gained 37.5 cents to $55.125.
The Dow Jones utilities average rose 0.98 to 215.48. Detroit Edison Co. rose 37.5 cents to $34.25; American Electric Power Co. climbed 12.5 cents to $42.375; and Consolidated Natural Gas Co. rose 50 cents to $43.75.
Philips Electronics NV's American depositary receipts fell $4.625 to $35.75.
Pub Date: 3/26/96