Microsoft leads drop as Nasdaq falls 1.2% Speculation that U.S. may halt issue of Windows 98 causes firm's stock to slide


NEW YORK -- U.S. stocks fell yesterday amid concern that a robust economy will prod the Federal Reserve to raise interest rates this year.

Microsoft Corp. slid for a sixth day on speculation that the government might block the release of a key new computer program.

The Dow Jones industrial average fell 77.97 to 8,976.68, bringing its three-day slide to 2.3 percent. The Standard & Poor's 500 index dropped 9.78 to 1,095.14, and the Nasdaq composite index declined 21.54 to 1,835.14 -- its lowest level in more than a week.

Among other broad market indexes, the Russell 2,000 index of small-capitalization stocks lost 3.41 to 475.96; the Wilshire 5,000 index fell 88.95 to 10,459.44; the American Stock Exchange composite index slipped 1.08 to 742.25; and the S&P; 400 midcap index slid 2.70 to 370.61.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost 1.51 to 238.11.

Two stocks fell for every one that rose on the New York Stock Exchange, where about 592 million shares changed hands. Wednesday, 596 million shares traded on the Big Board.

Microsoft slid $3 to $83.375 on concern that the Justice Department may try to block the software company's May 15 release of its Windows 98 system.

The market's decline overshadowed a rally in Chrysler Corp. Germany's Daimler-Benz AG agreed to buy the No. 3 U.S. automaker for $39 billion, or $62 a share, the latest step by companies around the globe to boost their profits by extending their reach into new markets.

Chrysler rose $4.6875 to $53.50 in trading of 29.5 million shares, making it the most active stock on U.S. exchanges. Daimler-Benz's American depositary receipts fell $2.1875 to $106.375. General Motors Corp. dropped $1.0625 to $66.875, and Ford Motor Co. lost 12.5 cents to $45.625.

Walt Disney Co. declined $5 to $119.1875, leading the Dow's decline. Goldman, Sachs & Co. analyst Richard Simon lowered his 1998 and 1999 earnings estimates for the entertainment company, though he still recommends buying Disney shares.

Chemical companies slumped after DuPont Co. President and Chief Executive Charles Holliday said the company's target to increase earnings 10 percent a year will be a "particular challenge" in 1998 because of weak Asian economies and declining prices for some chemicals.

DuPont, one of the 30 Dow industrials, fell $2 to $73.75; Monsanto Co. slid 50 cents to $53.125; Dow Chemical Co. fell 81.25 cents to $97.0625; Air Products and Chemicals Inc. slid 75 cents to $87.0625; and Union Carbide Corp. lost 93.75 cents to $51.4375.

Among the day's bright spots, Recoton Corp., a maker and marketer of audio- and video-electronic equipment, rallied $3.625 $29.25. The company said it earned 30 cents a diluted share in the first quarter, up from 5 cents a year ago and above the 8 cents analysts forecast.

Talbots Inc. surged $3.9375 to $23.375 after the retailer of women's and children's clothing said it expects to earn about 40 cents to 45 cents a share in its fiscal first quarter. Analysts expected the company to earn 31 cents a share in the quarter ended April 30.

America Online Inc. rallied $1.75 to $89.75 after the No. 1 online service reported higher-than-expected profit in its fiscal third quarter, boosted by strong subscriber and revenue growth.

Earlier, stock prices fell across most of Asia as anti-government rioting in Indonesia fueled investors' concern about the region's stability. The Indonesian rupiah plunged 10 percent, although Jakarta's benchmark stock index soared more than 5 percent. Hong Kong's Hang Seng index fell 1.4 percent to 9,971.93, while Japan's Nikkei 225 stock index fell 0.7 percent to 15,143.03.

Britain's FT-SE 100 index fell 0.9 percent, France's CAC 40 index slid 1.0 percent and Germany's DAX Ibis index lost 1.9 percent.

Pub Date: 5/08/98

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