Computer Sell Programs Push Dow Down 19.9 : Market Overview

* Blue chip stocks stumbled, pressured by computer sell programs amid a lack of interest prior to upcoming economic data. The Dow Jones average closed 19.90 points lower at 3,304.56.

* In the credit markets, Treasury bond prices fell sharply ahead of an announcement about the government’s upcoming quarterly refunding auction. The yield on the Treasury’s bellwether 30-year bond fell was quoted at 8.11%, up from 8.04% late Friday.

Stocks

Sell programs drove blue chips lower in the final minutes of the day, and the weak bond prices added downward pressure, analysts said.

Analysts said investors were cautious ahead of the Treasury’s quarterly refunding announcement Wednesday. The focus was also on reports this week on unemployment, consumer confidence and personal income.

“The market is just going to drift until we get an opportunity to look at the big (quarterly refunding) announcement,” said Joseph Barthel, director of investment strategy at Fahnestock & Co.

In the broader market, declining issues outnumbered advancers by about 9 to 8 on the New York Stock Exchange.

Big Board volume totaled 172.82 million shares, down from Friday’s 198.77 million.

Over-the-counter stocks posted a third straight loss, shedding 5.95 points to 566.94, weighed down by weak technology issues.

“It was more of the same follow-through,” said Brett Discher, senior equity trader at Dain Bosworth Inc. “The leaders are now the laggards. I think we’ve still got to take a little bit of the stuffing out of this market.”

Analysts said the Federal Reserve could act to further ease its money policy, based on the outcome of the refunding. The goal would be to help the stock market, which faces competition from rising bond yields, they said.

“I would not be surprised that the Fed, in order to be more accommodating toward refunding, decides that they are going lower again,” said Barthel at Fahnestock. “They recognize the bond market has been under a bit of pressure.”

Among the market highlights:

Drug issues improved slightly as investors looked for bargains after a major selloff in the past few sessions.

* Merck rose 1 1/8 to 141 1/4. Pfizer edged up 1/4 to 69. Johnson & Johnson gained 1 1/2 to 93 5/8. Bristol-Myers Squibb rose 5/8 to 74 3/8.

* Compaq Computer dropped 3 1/4 to 23 5/8 after the company reported a 60% plunge in first-quarter earnings. Goldman Sachs cut its rating on the computer company to sell from hold.

* BMC Software slumped 7 3/4 to 49 3/4. The stock was removed from Goldman Sach’s recommended list after it reported fourth-quarter results, which the brokerage house said were disappointing.

* Seagate Technology slipped 7/8 to 13 7/8. Citing competitive pressures in the disk drive sector, the company said it expects to operate with gross margins in the 20 to 22% range this year.

In overseas trading, a late surge helped London’s Financial Times 100-share average push to a new 1992 closing high. The average closed 15.2 points higher at 2,658.2, surpassing its previous high for the year, reached on April 24.

In Tokyo, stocks ended moderately lower after a day of quiet, futures-led trade. The 225-share Nikkei average ended down 91.93 points at 17,450.52.

Frankfurt’s 30-share DAX average fell 3.48 points to 1,742.22.

Credit

Elliott Platt, research director with Donaldson, Lufkin & Jenrette Securities Corp., said the bond market, like the stock market, was nervous in advance of Wednesday’s announcement about next month’s Treasury refunding auction, projected at about $37 billion.

At that amount, the auction would be larger than the previous sale. Credit market watchers are concerned about large supplies of securities hitting the market and sending bond prices down, said Gary Schlossberg of Wells Fargo & Co.

That concern has been compounded by news that has failed to show any fundamental weakness in the economy, he said. News of economic improvement normally depresses bond prices, since it lessens the likelihood the Federal Reserve will lower interest rates.

The price of the Treasury’s bellwether 30-year bond, which falls when the yield rises, fell 25/32 point, or $7.81 per $1,000 in face amount.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3.875%, up from 3.625% late Friday.

Currency

The dollar weakened abroad after key finance ministers called the Japanese yen undervalued, but the U.S. currency overcame much of the selling pressure and ended mostly higher in domestic trading.

Currency brokers said the principal bit of news moving the market came late Sunday, when finance emissaries of the Group of Seven industrialized nations meeting in Washington urged Japan to stimulate its economy and concluded that the yen’s recent weakness is hurting Japan’s trading partners.

In New York, the dollar fell to 132.85 Japanese yen, down from 134.45 yen late Friday. Against the German mark, the dollar was quoted at 1.6540 marks, up from 1.650.

The British pound fetched $1.778, slightly more expensive than its Friday rate of $1.775.

Commodities

Grain and soybean futures prices slipped Monday on the Chicago Board of Trade after Agriculture Secretary Edward Madigan said export credits to the former Soviet Union may be delayed.

On other commodity markets, precious metals retreated; oil futures were mostly higher, and meat and livestock were mixed.

Wheat for May delivery was down 2 cents at $3.848 a bushel; May corn was 2.50 cent lower at $2.47 a bushel; May oats were down 3.25 cent at $1.39 a bushel; May soybeans were 1 cent lower at $5.74 a bushel.

Meanwhile, precious metals slipped in lackluster trading on New York’s Commodity Exchange, with gold settling 30 cents lower at $336.60 an ounce, and silver was 2.2 cents lower at $3.941 an ounce.

On the New York Mercantile Exchange, light, sweet crude for June delivery was 7 cents higher at $20.29 a barrel.