Tech Shares Slump, but Dow Sees Tiny Gain

Technology shares slid sharply again Tuesday on worries about computer industry profits, but a late surge trimmed most losses in other sectors.

The Dow Jones industrial average rose 1.48 points to 5,719.27, rebounding in the last half an hour from an 18-point deficit and after shedding a morning gain of 12. The tiny gain in the blue-chip measure nevertheless makes for a fifth straight advance for a total of about 91 points.

Trading volume picked up as money managers began positioning their portfolios for end-of-quarter reports to clients. That benefited many blue-chip and larger company issues.

“We’ve got three more days of potential window dressing,” said Ricky Harrington, senior vice president and technical analyst at Interstate-Johnson Lane in Charlotte, N.C. “Funds are staying with big blue chips and ridding their portfolios of losing stocks, so those are under more pressure.”

Declining issues outnumbered advances by a 6-to-5 margin on the New York Stock Exchange, where volume totaled 389.01 million shares as of 4 p.m.

The NYSE composite index rose 0.02 point to 358.03, and the Standard & Poor’s 500-stock index fell 0.37 point to 668.48.

Technology shares were battered again, dragging down the struggling Nasdaq and American stock markets, as worries continued about the profit outlook for the computer sector. The Nasdaq composite index fell 10.32 points to 1,172.58.

Several large and small companies in computer-related businesses have issued cautious outlooks this month, ending what had been a powerful rally in the sector. Tuesday’s technology slide was led by 3Com, a leading maker of computer networking equipment, which reported a profit that only met analysts’ expectations.

In active Nasdaq trading, 3Com fell 4 13/16 to 45 13/16; Sun Microsystems fell 2 1/4 to 57 1/8; Dell Computer fell 2 1/2 to 50 5/8; and Microsoft fell 2 1/8 to 122.

After the markets opened, a Realtors group reported that despite rising mortgage rates, sales of previously owned homes rose 1.4% in May, tying a record set more than two years ago.

Many economists had expected the buying to slow. The bond market lost little ground on what could be taken as an indication of rising inflationary pressure as analysts held firm to predictions that higher mortgage costs will slow spending on homes.

A separate report issued Tuesday indicates that consumer confidence in June tumbled to its lowest level in five months, suggesting the economy could start to slow in coming months.

Stock and bond prices retreated after the reports appeared, but Treasuries remained positive on the day, with the yield on the long bond edging down to 7.04% from 7.08%. The yield, a benchmark for determining borrowing costs on many types of loans, had shot toward 7.20% two weeks ago as investors became concerned about the prospects for more rapid inflation.

Analysts are divided as to whether the Federal Reserve Board’s policy meeting next week will produce an increase in the central bank’s short-term lending rates, which would slow spending.

Among market highlights:

* Much of the buying in stocks was in so-called defensive stocks, including shares in companies whose sales and earnings are not much affected by an economic slowdown. Pfizer rose 1 to 74, Campbell Soup added 1 1/2 to 68 5/8, Procter & Gamble gained 2 to 93 1/2 and Chase Manhattan tacked on 1 3/8 to 70 1/8.

* Chrysler lost 2 5/8 to 63 5/8, Ford Motor dropped 5/8 to 32 3/4 and General Motors fell 1 1/4 to 53 1/8 after a Bear Stearns analyst initiated coverage of the auto makers with an unattractive rating.

* ITT rose 2 to 64 after Salomon Bros. issued a strong recommendation to buy the company’s stock.

* OrthoLogic tumbled 8 5/8 to 20 7/8 on news that a suit seeking class-action status had been filed in Arizona Superior Court alleging the company issued false statements to inflate its stock price. The company said the suit has no merit.

Selling related to beliefs that scandal-plagued Sumitomo Corp. will liquidate its copper holdings hit world copper markets again, with copper prices falling to new 2 1/2-year lows on heavy selling.

Market Roundup, D7