FINANCIAL MARKETS : Dow Off 14.34; Concern Over Earnings Cited

The stock market fell Thursday as computer issues took a beating after high-flying Compaq Computer Corp. announced that earnings would be below expectations.

Other companies also reported disappointing third-quarter earnings, which further weighed on the market.

The Dow Jones index of 30 industrials dropped 14.34 points to 2,631.56.

Declining issues outnumbered advances by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 565 up, 928 down and 504 unchanged.

The Labor Department is due to report this morning on the employment situation for October.

Advance estimates call for the figures to show a relatively modest increase in non-farm payroll employment, reinforcing recent evidence of slowing economic growth. That would presumably give the Federal Reserve extra leeway to relax its credit policy soon, encouraging interest rates to fall.

But brokers said investors were still worried about unexpectedly weak earnings reports issued by many companies for the third quarter.

Many Wall Streeters believe that profits and dividends may suffer further this winter, even if the economy is able to achieve a “soft landing” rather than any severe slump.

Uneasiness on that score was heightened when Compaq Computer projected lower fourth-quarter profits. At the end of the session, the stock of the Houston-based computer company had plunged 16 7/8 to 89 1/8, losing 16% of its value. It was the most-active stock in New York Stock Exchange composite trading, with more than 5.6 million shares changing hands.

“It was a cruel blow to the one computer stock that had performed well,” said Dudley Eppel, senior vice president and trader at Donaldson, Lufkin & Jenrette.

“This is a stock that is in every institutional growth stock portfolio we have,” said Trude Latimer of Josephthal & Co. She said money managers began jettisoning the stock as soon as the news came out.

Among other leading computer and technology issues, Computer Associates International dropped 1 1/8 to 11 3/8, International Business Machines fell 7/8 to 97 7/8, Hewlett-Packard dropped 2 to 44 1/2 and Microsoft retreated 5 7/8 to 76 1/4 in the over-the-counter market.

IBM, which was trading ex-dividend, hit its lowest levels since 1983.

Eastman Kodak lost 1 5/8 to 42 7/8. The company reported lower earnings for the third quarter and said it would take a substantial fourth-quarter charge for restructuring.

UAL dropped 4 to 173 after trading briefly above 180 following word late Wednesday that Reliance Group sought clearance to increase its interest in the company to more than 15%.

One exception to the downtrend was the precious metals group, which has benefited lately from an upswing in world gold prices. ASA Ltd. gained 1 3/8 to 50 3/4, Newmont Gold rose 1 3/8 to 42 5/8, Hecla Mining added 3/4 to 14 1/2 and FMC Gold advanced 3/4 to 12.

Big Board volume came to 152.44 million shares, down slightly from Wednesday’s 154.24 million.

In Tokyo, major investors packed up early for Japan’s three-day weekend, letting the Nikkei index wallow before closing lower, but still off its lows in moderate trade. The key 225-share Nikkei fell 69.57 points to close at 35,494.86

Share prices closed modestly lower on the London Stock Exchange after the exchange’s confidence was shaken by unconfirmed rumors of an insider trading scandal touching the government and by continued declines on Wall Street. The Financial Times 100-share index closed down 6 points to close at 2,154.1.

Credit

Bond prices edged slightly higher in light trading as the bond market also awaited the October employment report.

The Treasury’s benchmark 30-year bond edged up 1/8 point, or about $1.25 for every $1,000 in face value. Its yield fell to 7.87% from 7.88% late Wednesday.

Market players are often reluctant to make sizable commitments to buy or sell bonds in advance of an economic report that could potentially move the market.

“Nobody wants to get venturesome,” said Robert Chandross, economist for Lloyds Bank PLC in New York.

Another factor constraining bond market activity is uncertainty about whether Congress will act soon enough on raising the federal debt ceiling to permit the Treasury to proceed with its plans to auction $40 billion in securities next week. The auction plans were announced Wednesday but could be delayed without enactment of a higher debt ceiling.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.75%, down from 9.25% late Wednesday.

Currency

The dollar finished mixed in light trading as currency dealers also awaited the release of fresh data on the economy.

The dollar fluctuated in a narrow range as dealers awaited the release of unemployment figures for October.

Kevin Lawrie, a vice president at Bank of Boston’s New York office, said currency dealers were looking for a slight increase in unemployment, which would prove bearish for the dollar.

Much of the day’s trading centered on other currencies, particularly the British pound, which took a beating following rumors that one or possibly two government ministers had resigned because of insider trading offenses.

Despite a denial issued by the prime minister’s office, the pound still lost more than 1.5 cents against the dollar. Traders said the West German mark and Japanese yen directly benefitted from the pound’s troubles.

Earlier in Tokyo, the dollar closed at 143.75 yen, up from 143.08 yen on Wednesday. In London, the dollar ended lower at 143.65 yen. In New York, the dollar finished at 143.43 yen, down from 143.80 yen late Wednesday.

In London, one pound cost $1.5660, cheaper for buyers than Wednesday’s late $1.5815. In New York, one pound cost $1.5695, less expensive than $1.5755 on Wednesday.

Commodities

The gold futures market drew strength from the stock market’s decline, hitting three-month highs on New York’s Commodity Exchange amid growing fears of a worsening outlook for equity investments.

On other commodity markets, copper futures fell sharply; stock-index futures sank; pork bellies surged for the fourth straight day while livestock futures retreated; grains and soybeans advanced, and oil futures fell.

Gold settled $6 to $6.20 higher, with the contract for delivery in December at $382.90 an ounce, its highest settlement since July 26. Silver finished 10.2 cents to 10.6 cents higher, with December at $5.29 an ounce.

The gold market’s gains more than offset its modest losses in each of the three previous sessions.

Analysts said the strength stemmed partly from the stock market’s steep intraday losses, although stock prices rebounded after the gold futures market closed.

The stock market’s volatile performance in recent weeks has sent many investors running to the perceived safety of precious metals and gold stocks, and Thursday’s drop in stock prices encouraged the trend.

Copper futures weakened on news that a contract dispute at a Chilean copper mining complex had been settled.

Copper settled 90 cents to 3.35 cents lower, with the contract for delivery in December at $1.134 a pound.

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