NEW YORK -- An afternoon slump in Microsoft Corp. and Intel Corp. shares pulled the Standard & Poor's 500 index down from its Wednesday record yesterday and took the steam out of a two-week rally in computer shares.
The S&P; 500 fell 3.60 to 1,129.28 on renewed concern about profits for the computer industry's bellwethers.
Microsoft fell $3.375 from its Wednesday high to $101.5625, after analysts said sales of its Windows 98 operating system, which went on sale yesterday, aren't likely to repeat the success of Windows 95.
Intel dropped $1.75 to $75.625. Intel didn't warn of a profit shortfall for the current quarter, as some had feared, but investors said they are reluctant to bid the shares higher without assurance that the glut of personal computers will ease in the second half.
Intel, the world's biggest computer-chip maker, and Microsoft, the No. 1 independent maker of personal computer software, led stock gains this week on predictions that demand for their products would revive in the second half of the year.
The companies had slumped with other computer stocks as Asia's slowdown hurt business. In the previous nine days, though, Microsoft had soared 23 percent.
The Dow Jones industrial average rose 11.71 yesterday to 8,935.58, losing most of a 101.14-point gain that had taken the average above 9,000 for the first time since June 10.
The Dow would have fallen if not for a $4.25 gain in Union Carbide Corp., to $52.25, on expectations that the No. 4 U.S. chemicals company will radically alter its businesses and cut costs over the next six to 12 months.
The Nasdaq composite index, full of computer stocks, fell 14.51 to 1,863.25.
Other broad market indexes were mostly down. The Russell 2,000 index of small capitalization stocks lost 1.15 to 450.16; the Wilshire 5,000 index slid 29.00 to 10,591.96; the American Stock Exchange composite index climbed 4.48 to 713.96; the S&P; 400 midcap index slipped .51 to 356.97; and the New York Stock Exchange's composite index fell 1.04 to 576.14 .
The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost .46 to 232.37.
Declining stocks led advancers on the New York Stock Exchange by a 4-to-3 margin. About 658 million shares changed hands on the NYSE, down from 682 million yesterday.
The dollar finished the day at 142.30 yen, the strongest since the United States and Japan sold dollars June 17 to bolster the yen.
Lam Research Corp., already down 26 percent this year, fell 37.5 cents to $21.6875. Lam said it will fire up to 1,100 employees and take a charge of at least $55 million this quarter, because weak demand has spread from Asia to all parts of the world. The company is battling Applied Materials Inc. to become the largest chip equipment maker.
Shares of 3Com Corp. rose $4.375 to $31.50 after beating earnings estimates and announcing a stock buyback. More than 30 million shares changed hands, making 3Com the most active stock in the United States.
AT&T; Corp. fell for a second day, losing $1.625 to $58.375, after announcing a $45.8 billion purchase of Tele-Communications Inc. that will hurt earnings for three years.
Saks Holding Inc. rose $2.6875 to $27.50 after the retail holding company said its majority shareholder, Investcorp International, is putting it up for sale.
Household International Inc., the second-largest consumer finance company, rose $2.25 to $52.375 after telling analysts it expects earnings to grow 20 percent annually in 1999 and 2000 and 17 percent in 2001, after buying rival Beneficial Corp. Beneficial shares jumped $6.9375 to $159.625.
ITT Industries Inc. rose $1.125 to $35.1875 after announcing it has agreed to sell a car parts unit to Valeo SA, the world's 10th-biggest car parts maker, for $1.7 billion.
Bed, Bath & Beyond Inc. tumbled $6.375 to $49.875. The home furnishings retailer reported earnings at the low end of analysts' expectations, after beating forecasts for the last two quarters.
Pub Date: 6/26/98