Blue Chips Edge Higher but Tech Shares Slide

Technology shares slid again as worries about computer industry profits intensified Thursday. Blue-chip issues fared better, but stocks continued to flounder amid persistent worries about inflation and interest rates.

“We had a little bit of panic-type trading in technology. But we’ve really cut losses as the quality names come back,” said Bill Meehan, an analyst at Prudential Securities.

The Dow Jones industrial average rose 11.08 points to close at 5,659.43 after giving back an early gain of 31 points and recovering from an afternoon slide of 15. Declining issues outnumbered advancers by a solid 5-3 margin on the New York Stock Exchange.

Broader measures of blue chips and other large companies also finished near their opening levels, but the technology-laden Nasdaq market fell sharply, more than 1%. The Standard & Poor’s 500-stock index rose a tiny 0.14 point to 662.10, at least technically snapping an eight-session losing streak.

Trading was mostly quiet, although volume picked up considerably at the end of the day as traders positioned themselves for Friday’s expirations of options contracts to buy and sell stocks and stock-related securities at specific prices.

The technology stocks have been under pressure since last week because of warnings of poor earnings from several companies.

Selling was stoked after analysts trimmed their earnings estimates on both International Business Machines, which lost 1 1/2 to 100 3/4, and Hewlett-Packard, off 1 5/8 to 95 1/8.

The selling also spread to Cisco Systems, which fell 1 to 52 3/8, and Intel, off 1/4 at 71 1/8.

Internet stocks were also hard-hit at the height of frenzied afternoon selling. America Online fell 1 1/4 to 39 1/2 after trading as low as 36 5/8, U.S. Robotics fell 1 3/4 to 84, and the Internet search firm Lycos fell 7/8 to 10 5/8 after hitting a 52-week low of 8 3/4.

Some analysts said they were puzzled at the overall weakness of technology shares.

“There is absolutely nothing to account for the free fall in techs. Many large blue-chip companies we talk to or the Street talks to have said they will meet their quarter,” said Philip Orlando, chief investment officer at Value Line Asset Management.

Bond yields were steady, although they had risen during the day after a Federal Reserve Bank of Philadelphia survey did little to change the perception that the Fed will soon raise short-term interest rates.

Among market highlights:

* Banking stocks were another focus as the group came under pressure after Bank of New York’s surprise news that it will establish a $350-million reserve for future credit card losses. Bank of New York fell 1 1/4 to 51 1/4 as several analysts downgraded the stock. Chase Manhattan lost 2 to 69 and Citicorp fell 1 3/8 to 80 7/8. Credit card companies that fell included First USA, off 2 1/2 to 54 1/2; Capital One Financial, off 1 1/8 to 29 1/4; and Advanta, down 2 7/8 to 47 3/4.

* Among computer makers falling with other technology stocks, Dell fell 2 1/2 to 51 5/8 and Gateway 2000 lostl 2 1/4 to 32 3/8.

* Among IPOs, Fine Host, a contract food service company, was priced at 12 a share and ended at 11 3/4. CardioVascular Dynamics, a maker of catheters used to treat vascular diseases, was priced at 12 and closed at 11.

Overseas, Tokyo’s Nikkei stock average rose 0.3%, Frankfurt’s DAX index fell 0.6%, and London’s FTSE-100 fell 0.7%.

U.S. wheat prices fell as hot, dry conditions in key growing areas allowed this year’s harvest to gather pace.

Dealers also noted that the National Weather Service’s six-to-10-day outlook called for normal to above-normal temperatures and below-normal precipitation in key wheat areas.

A total of 16% of U.S. winter wheat had been harvested as of Sunday, already slightly ahead of the five-year average of 12%.

July wheat on the Chicago Board of Trade closed 6 cents a bushel lower at $4.87 1/2.

Market Roundup, D6