FINANCIAL MARKETS : Dow Again Hits New High, but Nasdaq Drops

Market Overview

* Strength in economically sensitive issues carried blue-chip shares to another record high Wednesday, but some worse than expected corporate earnings reports depressed technology stocks.

* Long-term Treasury bonds rose as investors weighed the impact of upcoming government auctions of bonds and notes.

Stocks

The Dow Jones industrial average rose 14.08 points to 3,884.37, eclipsing its previous mark of 3,870.29 set Monday and matched Tuesday. Big Board volume was an active 311.37 million shares. Advancing issues outnumbered declines 8 to 7 on the New York Stock Exchange.

However, it was Nasdaq stocks that stole the show, as microchip giant Intel, Sun Microsystems and Borland International all reported earnings below analysts’ forecasts. In NYSE trading, Digital Equipment earnings also fell short of estimates. The Nasdaq composite index fell 3.74 to 789.28.

Those stocks tumbled, and although the disappointments were not dramatic, they pulled down other technology issues.

Intel lost 4 3/4 to 62 1/2, Sun Microsystems fell 3/4 to 27 1/4, Borland fell 1 1/2 to 13 7/8, Digital Equipment tumbled 3 3/4 to 32 5/8 and Microsoft dropped 1 3/8 to 83 1/4, all in active trading.

“The carnage in technology stocks was the story today,” said Michael Metz, investment strategist at Oppenheimer & Co.

Still, the Dow held up well, said analysts, who attributed its strength to continued buying in the so-called cyclical stocks. Minnesota Mining & Manufacturing rose 2 to 111 3/8 and Aluminum Co. of America rose 1 to 74 7/8.

Strong stock prices abroad supported much of the market in early trading.

In Tokyo, the Nikkei 225-share average soared 524.85 points to 19,039.40, its first close above 19,000 since Nov. 2. Frankfurt’s DAX gained 20.54 points to end at 2,134.38, and London’s Financial Times 100-share average closed 38.1 points higher at 3475.1. Mexico City’s Bolsa index gained 44.88 points to end at 2,601.50.

Among the market highlights:

* Pfizer was another company depressing a whole industry with a lower than expected profit report, falling 5 to 62 7/8. Merck fell 3/4 to 35 7/8 on the news, while Eli Lilly lost 1 5/8 to 59 7/8. Schering-Plough was off 1 7/8 to 64 3/8 and American Home Products lost 7/8 to 64 1/4. “There’s a herd psychology today,” said Hugh Johnson, chief investment officer at First Albany Corp.

* Synoptics Communications lost 3 1/2 to 27 3/4 after Merrill Lynch cut a rating on the stock, citing its earnings outlook.

* Chrysler slipped 1 1/2 to 61, General Motors dropped 1 1/8 to 61 and Ford fell 1 1/8 to 67 1/2.

* McDonnell Douglas fell 1 1/8 to 112 3/8 after reporting a $132-million fourth-quarter loss.

* BankAmerica lost 1 1/8 to close at 46 1/2. It posted a smaller than expected profit.

Other Markets

The yield on the Treasury’s key 30-year bond rose to 6.29% from Tuesday’s 6.26% close. Its price, which moves in the opposite direction, was down 3/8 point, or $3.75 per $1,000 in face value.

Prices of intermediate-term maturities were unchanged to 1/8 point lower, while short-term Treasury securities rose by 1/32 point, the Telerate Inc. financial information service reported.

The Treasury announced at midafternoon that it will sell $17 billion in two-year notes and $12 billion in five-year notes at auctions next Tuesday and Wednesday.

The amounts were generally expected. But the sales come amid other bond and note auctions that are raising worries about whether there will be sufficient demand to absorb the new supply.

Also pressuring long-term bond prices was an upbeat Federal Reserve Board report showing fresh “signs of acceleration” in the economy as 1994 began, including new factory hiring and strong consumer spending.

Meanwhile, in currency trading, the dollar rose against the Japanese yen as the Clinton Administration approved Japan’s plan to allow U.S. companies greater access to its construction market. The dollar was little changed against other currencies.

In commodities trading, gold for current delivery closed at $392.30 an ounce, off 80 cents from Tuesday, while silver finished unchanged at $5.326 an ounce.

Elsewhere, crude oil futures ended 35 cents higher at $15.22 a barrel on the New York Merc.