Plug Pulled Again on Tech Stocks; Yields Hold Steady

Technology stocks fell sharply Wednesday as investors, spooked by a series of cautious profit outlooks in the computer industry, continued their two-week spree of dumping tech shares to secure profits on a powerful spring rally.

Meanwhile, crude oil prices moved higher Wednesday on fears that shipments from the Middle East could be in jeopardy after the deadly blast at the U.S. military base in Saudi Arabia on Tuesday.

A key measure of technology stocks, the Nasdaq composite index, fell 19.29 points to 1,153.29, recovering slightly from a 25-point plunge on some bargain hunting. But that is still the lowest close since late April, when the index was setting new highs almost daily. Since setting a high at 1,249.15 on June 5, the Nasdaq has tumbled nearly 7.7%.

The tech decline dragged down the broader market as money managers worked to lock in profits and embellish their portfolios for the end of the quarter.

The Dow Jones industrial average fell 36.57 points to 5,682.70, about 9 points better than its low for the day.

The barometer of 30 big U.S. companies and other blue-chip measures hung near their opening levels during the morning, then succumbed to the darkening mood of the technology-heavy Nasdaq market.

“The carnage in the Nasdaq has to make a lot of market watchers nervous,” said Michael Metz, vice president of Oppenheimer & Co. “People are nervous about the market itself. A lot of portfolio managers are paring their exposure.”

Other measures dominated by technology and smaller, more speculative companies continued to suffer with the Nasdaq. The Russell 2,000 list of smaller companies fell 4.63 points to 339.81, its lowest level since April 19.

The NYSE composite index fell 2.16 points to 355.87, and the Standard & Poor’s 500-stock index fell 4.09 points to 664.39.

Among technology issues, Dell Computer slid 4 7/8 to 45 3/4 in active Nasdaq trading. Intel fell 3/8 to 72 1/2; Cisco Systems fell 1 to 53 3/8; and Sun Microsystems fell 3/4 to 56 3/8.

Iomega was down 5 1/2 at 21 after the influential Cabot Market Letter recommended that investors sell the disk drive maker’s stock because its momentum is weakening. The stock had been part of Cabot’s model portfolio. A Wall Street Journal Page 1 article about an SEC inquiry concerning Cabot helped direct more attention to the investment newsletter’s recommendation.

Investors’ confidence also has been undermined by some anxiety that the amount of money investors have been pouring into mutual funds could shrink dramatically. The Investment Company Institute, a trade group, said Wednesday that monthly flows into stock mutual funds in May slowed slightly from their April pace.

“The story of the American market has been the spectacular flows --month after month--into mutual funds. If that story ends, we have a problem,” Metz said.

The markets appeared to be indifferent to the news that factory orders for durable goods hit records levels in May.

Among market highlights:

* Cyclical issues, which are linked most directly to economic growth, were weak. Eastman Kodak fell 2 1/8 to 76 3/4, Caterpillar fell 1 1/4 to 67, Boeing fell 1 3/8 to 89 and General Motors fell 1 1/8 to 52.

* Consumer stocks, by contrast, were among the Dow’s steadiest as investors sought companies with reliable revenues. Exxon rose 5/8 to 87; Coca-Cola rose 5/8 to 49 1/8; Procter & Gamble was unchanged at 93 1/2; Merck was unchanged at 65.

* Medtronic dropped 1 7/8 to 54, Dow Chemical declined 2 1/2 to 77 3/8 and Sofamor Danek Group fell 7 3/4 at 25 3/4 after the Supreme Court ruled that makers of medical devices can be sued in state courts over allegations that their products contained defects.

Overseas, Tokyo’s Nikkei-225 stock average rose 0.3%, and London’s FTSE-100 rose 0.4%.

Bond yields were barely changed after lukewarm demand for a fresh batch of five-year notes drained enthusiasm for buying other U.S. securities. The yield on the Treasury’s main 30-year bond eased to 7.03% from 7.04% late Tuesday.

Oil price gains were restricted by industry reports showing U.S. crude oil and gasoline supplies increased this past week, with gasoline’s increase contrary to seasonal trends.

Nymex August crude oil rose 69 cents to $20.65 per barrel, just short of the $20.75 contract high set last week. July gasoline rose 0.90 cent to 58.36 cents a gallon and July heating oil was 1.17 cents at 52.34 cents a gallon.

Market Roundup, D6