FINANCIAL MARKETS : Fresh Bashing of Tech Issues Drags Stocks Down

Another massive sell-off of technology shares sparked a broad stock market decline on Tuesday as blizzard-weary Eastern traders struggled back to work.

The latest breakdown of budget talks between President Clinton and Republican leaders also contributed to the markets’ negative tone--which may only worsen today, some analysts warned.

On Wall Street, the technology-heavy Nasdaq composite stock index plummeted 33.56 points, or 3.3%, to 998.81, its lowest close since early October.

The blue-chip Dow Jones industrials sank 67.55 points, or 1.3%, to 5,130.13, and the broader Standard & Poor’s 500 dropped 9.01 points, or 1.5%, to 609.45.

The tech sell-off that fueled the overall market slump began after software firm Symantec warned of weaker-than-expected fourth-quarter earnings, the latest in a parade of tech firm disappointments dumped on investors.

Symantec shares plunged 5 to 10 3/8, dragging other software stocks down.

Meanwhile, influential semiconductor stock analyst Rick Whittington of SoundView Financial shocked Wall Street by lowering his ratings on several computer-chip-related stock to outright “sells,” indicating that he believes the companies’ profit prospects are rapidly deteriorating.

Among the shares downgraded were Texas Instruments, which slid 3 5/8 to 45, and Applied Materials, down 3 3/4 to 33 5/8.

Finally, in late-afternoon trading, technology bellwether Motorola released dismal fourth-quarter earnings, crushing whatever remained of new buying interest in tech shares.

The continuing decimation of tech stocks “is highly demoralizing for the whole market,” said Michael Metz, investment strategist at brokerage Oppenheimer & Co. in New York. “This is, after all, where the real excitement and bull market leadership have been.”

Also late in the day, investors received word that Clinton and Congress were still far apart in budget negotiations. That sent long-term bond yields climbing sharply. The 30-year Treasury bond yield ended at 6.11%, up from 6.04% on Monday and the highest close since Dec. 20.

Investors are “truly scared” over the latest budget stalemate, said Fabio Savoldelli, a money manager at Chase Manhattan Private Bank. Wall Street has been counting on a balanced-budget deal to pave the way for further interest rate declines.

The decline in the Nasdaq market was particularly unnerving for many traders because the percentage drop was huge--equivalent to a 170-point drop in the Dow index.

“If you keep whacking the techs, which are bellwethers, what happens sooner or later is that you will erode the blue chips,” said Larry Wachtel, analyst at Prudential Securities.

In the broad market, declining issues led advancers 1,568 to 846 on the Big Board in heavy trading of 416 million shares.

“The economy is slowing, and that means corporate profits will be poor. Wall Street is just waking up to this fact,” Wachtel said. “There have been about 70 pre-announcements” of weaker-than-expected earnings.

He said Symantec’s woes put pressure on software leader Microsoft because Symantec said sales of software utilities for the Windows 95 operating system were weak.

“Each one of these high-tech companies is connected to another one,” Wachtel said.

Microsoft plummeted 6 1/16 to 80 3/16. Among other tech shares, Intel lost 2 5/8 to 55 and Compaq dropped 2 3/8 to 45 7/8.

Fear of flat or lower fourth-quarter earnings affected financial stocks as well.

Federal National Mortgage fell 2 to 120, Citicorp was down 2 at 63 7/8 and Wells Fargo lost 3 1/8 to 209 5/8.

Shares of the Big Three U.S. auto makers, meanwhile, fell because of anticipated cuts in first-quarter production and a major Ford Motor incentive program that is expected to force similar moves by its competitors, analysts said. Ford fell 5/8 to 28 1/4, Chrysler was down 2 3/8 at 53 1/4 and General Motors lost 1 1/8 to 49 1/2.

Some analysts say the breadth of the market’s weakness suggests that stocks are finally poised for a meaningful “correction” after 1995’s bull run. Major stock indexes can fall 10% to 15% in such corrections.