Stocks fall on concern computers will lag Electronic issues retreat; Dow, Nasdaq indexes fall

NEW YORK — NEW YORK -- U.S. stocks fell yesterday as semiconductor and computer issues retreated for a second day on concern that second-quarter earnings won't beat estimates. The Nasdaq composite index dropped to its lowest level in two months.

Shares of Digital Equipment Corp. slumped after at least three analysts slashed their earnings estimates for the current quarter, saying profits could fall 30 percent below estimates. The revisions to earnings came a day after computer networking company 3Com Corp. reported a disappointing profit.


The Dow Jones industrial average slid 36.57 to 5,682.70, halting a five-day advance that boosted it 91 points, or 1.6 percent. The drop in the 30-stock average was driven by losses in Eastman Kodak Co. and Caterpillar Inc.

The Nasdaq composite index, filled with computer and semiconductor issues, fell 19.29 to 1,153.29, its eighth drop in 10 days.


Among the Nasdaq's losing stocks, Microsoft Corp. fell $1.50 to $120.50; Intel Corp. slumped 37.5 cents to $72.50; Cisco Systems Inc. slid $1 to $53.375; Oracle Corp. fell 75 cents to $37.375; and Sun Microsystems Inc. gave up 75 cents to $56.375.

Shares of Digital Equipment fell $1.75 to $41.875. Morgan Stanley & Co. lowered its estimate for the computer company's 1996 earnings to $2.87 a share from $3.02, and Gary Helmig of SoundView Financial Group cut his estimate by a nickel.

Richard Chu of Cowen & Co. said Digital's fourth-quarter earnings could be as low as 86 cents a share, much lower than the $1.20 a share analysts had estimated earlier.

Among makers of computer hardware, Dell Computer Corp. shed $4.875 to $45.75; Compaq Computer Corp. fell $1.125 to $46.875; and 3Com dropped 68.75 cents to $45.125.

The Standard & Poor's 500 index slid 4.09 to 664.39 after falling 1.01 points Tuesday. Losses in drug, auto and bank issues also dragged down the index.

Broad market indexes also fell.

The Russell 2,000 index of small capitalization stocks fell 4.63 to 339.81; the Wilshire 5,000 index, which includes stocks on the New York, American and Nasdaq stock exchanges, fell 57.05 to 6,530.06; the American Stock Exchange market value index fell 6.11 to 575.63; and the S&P; 400 midcap index slipped 2.88 to 231.21.

Yesterday's most active stocks in U.S. composite trading were Iomega Corp., Danka Business Systems PLC, Intel Corp., Cisco Systems and Dell Computer.


Losers outnumbered gainers 1,495 to 940 on the New York Stock Exchange, where about 386.5 million shares changed hands. The three-month daily average volume on the Big Board is about 404 million shares.

The yield on the benchmark 30-year Treasury bond, which reflects investors' expectations for inflation, spiked as high as 7.09 percent before closing at 7.03 percent, down 0.01 from Tuesday.

Drug shares retreated, led by Pfizer Inc., which dropped $2.375 to $71.625. Watson Pharmaceutical Inc. slumped $1.875 to $39.75 and Alza Corp. lost $1.50 to $26.625.

For a second day, shares of auto companies retreated on concern that dwindling consumer confidence in the economy's prospects will cause sales to slump. Chrysler Corp. fell $1.375 to $62.25; Ford Motor Co. dropped $1 to $31.75; and General Motors Corp. slid $1.125 to $52.

The Morgan Stanley index of cyclical stocks -- shares of companies whose profits rise and fall with the economy's health -- dropped 3.57 to 366.91. The index is down 2.25 percent since Friday.

Apple Computer Inc. dropped 75 cents to $19.875, its lowest point in nearly 10 years, as analysts and investors said the future of the struggling computer maker remains in doubt.


Consolidated Delivery & Logistics Systems Inc. slumped 62.5 cents to $5.50. The provider of rush-delivery service said it doesn't expect second-quarter earnings to meet expectations, but didn't provide an estimate of what earnings will be.

Pub Date: 6/27/96