FINANCIAL MARKETS : Broad Sell-Off Trims 3 Weeks of Stocks’ Gains

Wall Street’s surprise plunge Monday pushed stock and bond prices back to their levels of late November, in effect taking back the powerful rally of the last three weeks.

Unnerved by a delayed opening of the New York Stock Exchange and disappointed in the lack of progress in federal budget talks, investors sold heavily from the outset. By the close of trading, falling stocks outnumbered winners by 2,023 to 487 on the New York Stock Exchange.

But NYSE volume, while heavy at 426 million shares, was below that of many recent sessions.

And the Dow Jones industrial average’s drop of 101.52 points, to 5,075.21, was a decline of just under 2%, or the equivalent of $1 off a $50 stock--hardly an indication of panic selling, analysts noted.

In the bond market, where investors sold on fears that the Federal Reserve Board won’t cut short-term interest rates at its meeting today, the 30-year Treasury bond yield’s rise from 6.09% to 6.20% returned it to where it stood Nov. 29.

Yet yields on three- and six-month Treasury bills auctioned Monday were below levels of a week ago--seemingly belying concerns that a Fed rate cut isn’t forthcoming.

Analysts said the trend in stock and bond markets today--after the Fed makes a decision on rates--will probably set the tone for the next few weeks. If prices rebound, Monday’s sell-off may quickly be forgotten, whereas another slide today could guarantee more profit taking ahead, experts say.

Among Monday’s highlights:

* While the political wrangling over the federal budget got much of the blame for triggering the market’s drop, analysts also noted that the approach of the quarter’s end is, as usual, compelling some companies to warn that their earnings won’t meet expectations.

Disappointing profit forecasts from firms as diverse as brokerage Charles Schwab, computer chip maker Advanced Micro Devices and paper company James River helped depress the market.

Schwab dropped 2 5/8 to 17, Advanced Micro lost 1 1/8 to 17 1/8 and James River fell 6 1/8 to 25 1/4.

* Technology stocks overall continued to tumble on fears that computer sales are weakening. Apple plunged 3 to 32 1/4, Adobe Systems sank 5 to 57 1/4, Seagate dropped 2 3/4 to 44 and Quarterdeck slid 6 15/16 to 24 1/2.

There were also winners, including Hewlett-Packard, up 1 1/8 to 77 1/4, and FileNet, up 3 to 44 1/2.

Nonetheless, the tech-heavy Nasdaq composite index skidded 27.92 points, or 2.7%, to 1,002.56, its biggest drop since a 35.77-point slide July 19. And the Bloomberg California stock index, also heavy with tech issues, lost 3%.

* Brokerage stocks were big losers, following Charles Schwab lower. Merrill Lynch fell 1 7/8 to 50 and Morgan Stanley dropped 3 3/8 to 78 1/4.

* In the Dow index, heavy-industry stocks bore the brunt of the selling. United Technologies sank 3 1/4 to 91 1/4, Caterpillar lost 2 1/4 to 57 3/4 and Chevron fell 1 5/8 to 50 5/8.

But many consumer growth stocks were also weak, including Coca-Cola, off 1 to 77 5/8, and Philip Morris, down 1 5/8 to 91 1/4.

* Among the day’s few gainers were some utilities, which often are “safe haven” stocks in times of turmoil. The Dow utility index inched up 0.28 point to 222.26.

In currency trading, the dollar lost ground with stocks and bonds, falling to 1.429 German marks from 1.4435 on Friday and to 101.52 Japanese yen from 102.05.

Most foreign stock markets also closed lower, with European and Latin American shares dragged down with U.S. stocks.

Market Roundup, D8