STOCKS : Dow Slumps 16.84 on Worries Over Earnings

Growing apprehension about the economy and corporate profits prompted renewed selling on Wall Street Tuesday, ending in the fourth straight losing session.

Technology stocks, stars of the market’s recent rally, led the decline for a second day.

The Dow Jones industrial average, which last week briefly topped the 3,000 level during trading, fell 16.84 points to close at 2,922.52.

Declining issues outnumbered advances by about 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,019 down, 565 up and 468 unchanged.

But Big Board volume continued to be moderate: 176.44 million shares against 161.60 million Monday. Analysts say that suggests there is no panic in the selling, but rather that investors who have made hefty paper profits in this year’s rally are just trimming their holdings.

Why sell? “I think there are a lot of concerns,” said McDonald & Co. Vice President Alice Sadlo. “We haven’t had great economic numbers, and we’re now beginning to see that (first-quarter) earnings are not going to be very good.”

Also, some institutional investors probably have retreated to the sideline with the upcoming “triple witching” Friday, in which expiring futures and options often cause volatility, said David Chao, head trader at County NatWest.

In addition, Sadlo noted that several economic reports, including data on producer prices and industrial production, are due at the end of the week. Investors want to see signs of an economic recovery, but without inflation.

But many analysts also point out, given the market’s large gains since mid-January--when the Dow was at 2,475--anything is an excuse to take profits now. Yet there still are many investors on the sidelines eager to buy in.

Not surprisingly, smaller stocks, which have led the 1991 advance, are taking a bigger hit as investors retreat. The NASDAQ composite index of small stocks lost 5.75 points, or 1.2%, to 461.40 Tuesday, versus the Dow’s 0.6% drop.

Among the market highlights:

* IBM, which was downgraded Monday by Merrill Lynch, lost 2 1/8 to 127, leading the tech group lower. And semiconductor firm Chips & Technologies tumbled 3 to 10 1/4 after it said it expects a “substantial” quarterly loss.

Those events helped spark other selling of tech stocks, many of which are up dramatically this year on expectations of booming sales worldwide. Compaq fell 1 3/8 to 66 1/4, DEC lost 2 5/8 to 76 3/8, AST Research slumped 2 to 24 and Cisco Systems dropped 3 1/2 to 49 1/2.

Elsewhere, Microsoft dropped 3 1/2 to 95 3/4. The company said it is cooperating with a Federal Trade Commission probe into its market dominance. Among other software stocks, Cadence Design lost 2 to 31 1/2 and Lotus fell 7/8 to 25 1/8.

* Biotech stocks were broadly lower. Amgen slumped 6 1/2 to 117, after having soared last week on a favorable patent ruling. Genetics Institute, which lost the patent suit but Tuesday said it will appeal, gained 7/8 to 39 7/8.

* Other health-care stocks also plunged in profit-taking. Many have led the market higher since last fall. U.S. Surgical fell 5 3/4 to 100, Medtronic dropped 4 3/4 to 110 5/8, Medical Care lost 6 1/4 to 44, Manor Care fell 2 5/8 to 17 and Medco Containment gave up 3 3/4 to 43.

* Blockbuster Entertainment was the most-active NYSE issue, falling 1 1/8 to 12 1/8. Montgomery Securities cut its rating after the company made a disappointing first-quarter earnings forecast.

* Among the few big winners, Kellogg gained 2 7/8 to 85 1/8. Morgan Stanley reiterated its buy rating and raised its first-quarter earnings estimate.

* Insurance-related stocks also were higher on expectations of a more favorable insurance pricing cycle ahead. Marsh & McClennan gained 1 3/8 to 81 and General Re added 1 1/2 to 98 1/2.

In overseas trading, German shares ended mixed after swinging through a 13-point range on the DAX average in a largely technical trading session. The DAX ended 5.83 points higher at 1,571.61.

British shares ended lower as the market began to consolidate its recent gains. The Financial Times-Stock Exchange 100-share average dropped 4.3 points to 2,454.8.

Japanese stocks closed firmer, encouraged by the yen’s gains against the dollar and by higher bond prices. The 225-share Nikkei index was up 58.05 points to 26,727.42 in light trading.

Credit

Prices of government bonds slipped as OPEC’s agreement to limit oil production renewed inflation fears and a drop in the dollar made dollar-denominated investments less attractive.

The Treasury’s benchmark 30-year bond fell 15/32 point, or $4.69 per $1,000 in face amount. Its yield, which rises when prices fall, rose to 8.26% from Monday’s 8.22%.

OPEC, meeting for the first time since the Gulf War, agreed to cut crude production by about 1 million barrels a day. News of the production cap sent oil prices higher. Light sweet crude for delivery in April settled at $19.68 per barrel, up 69 cents, at the New York Mercantile Exchange.

Inflationary pressures, such as an oil price rise, are of particular concern to the bond market since the yield of the securities is fixed no matter what the inflation rate.

Activity in the bond market was light and directionless before OPEC announced its move, said James Marshall, a bond trader with the Chicago investment firm Clayton Brown & Associates.

“What really took it down at the end was OPEC putting on a cap of 22 million barrels a day,” he said. The rise in oil prices also prompted a rise in a key gauge of inflationary pressures, the Commodity Research Bureau’s index of key commodity prices.

Bond prices also were hurt by a drop in the dollar’s value, traders said. A lower dollar makes dollar-denominated investments such as Treasury securities less attractive to global investors.

The federal funds rate, the interest charged on overnight loans between banks, was quoted at 5.938%, versus 6.063% Monday.

Currency

The dollar fell after a second day of central bank intervention succeeded in capping the currency’s bullish momentum--for now.

In New York trading, the dollar closed at 1.570 German marks and 135.84 Japanese yen, down from 1.581 marks and 138.20 yen at Monday’s close.

The central banks of Japan, Germany, Switzerland, Belgium, Denmark, Austria, Norway, Portugal and Italy said they were taking part in the intervention to curb the strength of the dollar and defend the stability of the German mark.

On Monday, 11 banks led by Germany’s Bundesbank mounted an attack to knock the dollar down, but it stood up to the selling pressure and closed higher.

But Tuesday, the selling appeared to have temporarily doused market psychology, forcing traders who were bullish about the dollar to regroup at lower levels.

But some traders said they remain keen on the dollar. “This is a short-term regrouping . . . The dollar is still very cheap,” one trader said.

Commodities

Grain and soybean futures prices closed mostly higher on the Chicago Board of Trade, as the market shook off the mostly bearish figures in the latest Agriculture Department crop report.

On other markets, energy futures were higher, livestock were lower, pork futures higher, gold was steady and silver lower.

Wheat futures rose in the wake of Monday’s Agriculture Department stock estimate of 957 million bushels. That is down from February’s estimate of 982 million.

Wheat settled 5.75 to 7.75 cents higher, with the contract for March at $2.792 a bushel; corn was 3.50 to 4.75 cents higher, with March at $2.507 a bushel; but soybeans were 1 cent lower to 0.75 cent higher, with March at $5.852 a bushel.

Elsewhere, March gold added 10 cents to $364.80 an ounce on the Comex; silver fell 6.4 cents to $4.01.

Market Roundup, D6