Tech Issues Put Drag on Stocks; Dow Falls 4.75 : Market Overview

* A wave of selling washed over technology stocks Thursday, dragging the broad U.S. market lower.

In Far East markets, however, Hong Kong shares led another major rally.

* Bond yields closed little changed after seesawing in reaction to the government’s report on wholesale inflation in November.

Stocks

Weakness in computer, semiconductor and related stocks set a negative tone for Wall Street on Thursday, ending the Dow industrials’ string of seven consecutive winning sessions.

The Dow eased 4.75 points to 3,729.78 after an early rally.

In the broad market, nearly all major indexes closed lower, led by the technology-heavy Nasdaq composite index of mostly smaller stocks. It fell 6.40 points to 761.49.

The tech sector was hurt by the Semiconductor Industry Assn.’s report of a slight slowdown in computer chip orders in November. In addition, company-specific news slammed several tech names.

Some investors were also leery after the government reported that wholesale prices overall were flat in November. While that should have allayed inflation worries, the so-called core wholesale inflation rate, which excludes food and energy, rose 0.4% last month, double the expected amount.

Peter Canelo, investment strategist at NatWest Securities, said the continuing weakness in the Nasdaq market could be a sign that the market overall is setting up for a significant pullback, perhaps on the order of 5%, early next year.

“Unless we can get the Nasdaq stocks to turn around and break to new highs, I think this is a sign of a lot of wear and tear on the market,” he said.

Thursday’s market highlights:

* Among computer chip makers, Intel lost 1 1/2 to 58, Motorola tumbled 2 7/8 to 91, Texas Instruments dropped 3 1/8 to 60 3/8 and Advanced Micro Devices gave up 1/2 to 17 5/8.

The selling also spread to computer makers. Apple slid 1 7/8 to 30, Compaq lost 1 1/4 to 71 7/8, Dell Computer eased 5/8 to 24 3/8 and AST Research sank 3/4 to 21 1/2.

* Among software firms, Microsoft dropped 2 3/8 to 81 1/8 on renewed fears that it is running behind on a major upgrade for its key operating systems.

Another software firm, Dataware Technologies, plummeted 7 1/4 to 8 3/4 after saying fourth-quarter earnings will be below expectations, in part because of disappointing sales.

Also, computer networker Novell dove 3 5/8 to 19 7/8 after reporting flat quarterly earnings.

* Telecom stocks fell with tech issues. Qualcomm lost 2 1/4 to 53, Ericsson slid 4 1/4 to 37 3/4 and America On-Line dropped 5 to 59 1/4.

* WMS Industries fell 1 3/8 to 29 1/8 on concerns about its recently disclosed purchases of Viacom shares in October. Viacom Chairman Sumner Redstone owns 25% of WMS, and the Wall Street Journal said the Securities and Exchange Commission is probing transactions between the two in light of Viacom’s mostly stock bid for Paramount Communications.

* On the upside, some industrial issues rallied further. GM rose 3/4 to 56, Emerson Electric jumped 1 1/8 to 58 3/8, Cummins Engine added 1 1/4 to 51 and Deere surged 1 3/4 to 70 3/4.

Overseas, key Asian markets rallied strongly. Hong Kong’s Hang Seng index rocketed 240.03 points to a record 9,990.26 on Thursday, and early today the index jumped over the 10,000 mark for the first time, to 10,172.76 in morning trading.

Records were also set early today in Singapore, where the Straits Times index was up 26.86 points to 2,193.18; and Kuala Lumpur, Malaysia, where the composite index was up 7.74 points to 1,075.08.

In Tokyo early today, the Nikkei index was up 196.62 points to 17,258.53 after surging 553.96 points Thursday.

In Mexico City on Thursday, the Bolsa index was finally hit by profit taking. It lost 35.13 points to 2,398.14.

In Frankfurt, the DAX index added 27.67 points to a record 2,175.80, but London’s FTSE-100 index eased 5.8 points to 3,271.6.

Other Markets

Bond investors seemed relatively happy with the flat November wholesale inflation report, even though the 0.4% rise in the core inflation rate added a somewhat disturbing note.

Further analysis showed that most of the core rate’s increase resulted from a one-month, 2.1% spike in auto prices that isn’t expected to be repeated.

By day’s end, interest rates were mostly unchanged. The yield on the Treasury’s 30-year bond eased to 6.15% from Wednesday’s 6.16%.

Elsewhere, gold for current delivery settled at $382.60 an ounce, off $1.20, on the Comex. Silver slipped 1.5 cents to $4.96 an ounce.

Market Roundup, D6