NEW YORK -- U.S. stocks fell yesterday as computer and semiconductor shares dropped in response to lower expectations for earnings growth.
The change in outlook reflected comments by Digital Equipment Corp., which told analysts and investors that a slowdown in European sales and a rise in the dollar's value will dampen earnings growth this quarter. Analysts lowered their earnings estimates afterward.
The Dow Jones industrial average fell 30.29 to 5,667.19, erasing an early 21-point gain. International Business Machines Corp. paced the retreat.
Walt Disney Co. and General Electric Co. rose after brokerages raised their ratings.
The Standard & Poor's 500 index dropped 5.41 to 673.03.
Also reflecting the broad market, the Russell 2,000 index of small companies fell 2.40 to 361.19; the Wilshire 5,000 index dropped 46.31 to 6,704.56; and the American Stock Exchange market value index slid 5.43 to 602.84.
Decliners outpaced advancers on the New York Stock Exchange by 1,391 to 1,021.
Digital's shares fell $3 to $46.50 after the company said that the economy in Europe is "softening" and the dollar's strength against some currencies is hurting results.
Several other computer-related companies also said during the past couple of days that their results would fall short of people's forecasts.
Micro Warehouse Inc., a direct marketer of software and peripherals, said yesterday that second-quarter profits wouldn't meet analysts' forecasts. Its shares lost one-third of their value, plunging $11.875 to $22.875.
Altera slid $3.125 to $42 after falling $2.25 Wednesday. The chip maker said after the close of trading Tuesday that its sales in the second quarter would fall 15 percent short of first-quarter levels.
The Philadelphia semiconductor index fell 5.79, or 2.9 percent, to 193.24.
IBM fell $3.625 to $101.25. Intel, the world's largest chip maker, fell $1.625 to $75.25. Sun Microsystems, a computer and software company, dropped $2.75 to $63.875.
Presstek Inc., a maker of computerized printing presses, plummeted $31.50 to $77.50 and traded as low as $60.
The Cabot Market Letter, one of the company's biggest boosters, said Presstek is being investigated by the Securities and Exchange Commission because of its recommendations and investments in Presstek shares. The stock traded at $200 May 21.
Other shares that Cabot recommended also retreated.
MRV Communications Inc. tumbled $11.75 to $54; Zoltek Cos. skidded $16.484375 to $66; and Iomega Corp. fell $1.875 to $37.875.
Disney climbed $2 to $62.50 after Smith Barney Inc. raised the entertainment company's shares to "buy" from "outperform." GE rose $1.875 to $86.25 after Morgan Stanley & Co. raised the stock to "strong buy" from "outperform."
Economically sensitive shares retreated. Aluminum Co. of America fell $1.75 to $57.875 after Donaldson, Lufkin & Jenrette downgraded the company to "underperform" from "market perform."
Caterpillar Corp., a construction equipment maker, fell $1.25 to $64.875.
Gymboree Corp. slid $1.50 to $33.875 after the children's apparel retailer said same-store sales for May dropped 6 percent.
Mobilemedia Corp. dropped $3.50 to $15 after Goldman Sachs downgraded the paging company to "market perform" from "buy" and removed it from the "recommended list."
Affymetrix Inc., a genetic analysis firm, rose $2.375 to $17.375 in its first day of trading. The company sold 6 million shares in its initial stock sale.
Pub Date: 6/07/96