Semiconductors Fuel Steep Slide as Dow Falls 132

U.S. investors on Friday continued rooting out stocks of companies that might be hurt significantly by Asia’s economic woes, and semiconductor issues topped the list--pacing a steep decline in major stock indexes.

The U.S. market’s second deep slide in as many days occurred even though Hong Kong’s market, the catalyst for the global sell-off that began on Thursday, rebounded sharply, with the Hang Seng index up 718.04 points, or 6.9%, to 11,144.34.

The Dow Jones industrial average rose initially Friday morning, then quickly plunged to near the 7,700 level. Although the Dow then rallied in the afternoon, a late sell-off sent it back down to 7,715.41 at the close, off 132.36 points, or 1.7% for the day, and not far above its intraday low of 7,695.

That followed Thursday’s slump of 186.88 points. But because the Dow had rallied early in the week, the week’s net loss was just 131.62 points, or 1.7%.

New York Stock Exchange trading volume reached 677 million shares Friday, the third-heaviest ever. But the market’s breadth was much improved from Thursday, when losers had swamped winners by 24 to 6. On Friday losers had only a 15 to 13 edge.

Likewise, in the Nasdaq market, the composite index’s loss of 20.33 points, or 1.2%, to 1,650.92 was less than Thursday’s 2.2% decline.

For the week the Nasdaq index was off just 1%. The Russell 2,000 index of smaller stocks lost 0.4% for the week.

But if the market overall held up better Friday, technology stocks were brutalized.

Concern that slowing economies in Asia will hurt semiconductor-related companies hammered stocks of such firms as Texas Instruments, which sank $9 to $111.88; Applied Materials, which lost $3.73 to $33.27; and KLA Tencor, which fell $5.88 to $52.38.

Intel’s announcement that it will postpone the opening of a new plant in Texas because of flagging demand for some chips also contributed to Friday’s decline. Intel slid $1.88 to $80.

“Stocks are going to get hammered with any disappointment that comes about,” and Asia looms as a big potential disappointment for some companies, said William Quinn, president of AMR Investments in Dallas.

The Morgan Stanley High-Tech stock index slumped 3%, to 475.75, its lowest since July 11.

Ali Irani, analyst at Oppenheimer & Co., said semiconductor equipment firms, such as Applied Materials, get about 30% of sales from economically troubled Southeast Asia. Many of those countries have seen their purchasing power slashed by devalued currencies and thus may have trouble importing high-tech equipment.

Fear that Hong Kong’s currency might be next to devalue triggered a massive sell-off in that market between Monday and Thursday, which spilled into markets worldwide on Thursday.

For a second day, however, the U.S. bond market benefited from an apparent flight to quality. Bond yields fell, with the 30-year Treasury bond ending at 6.27%, down from 6.30%. That is the lowest yield on the T-bond since it hit 6.23% on Oct. 7.

That was in sharp contrast to what happened to gold: Its price plummeted on fears that Asia’s woes will lead to dumping of gold there rather than new purchases.

Elsewhere in the world, stocks were broadly lower, as investors viewed profit-taking a smart strategy in light of Asia’s woes--and the steep gains many markets have enjoyed this year in Latin America, North America and Europe.

Mexico’s main stock index slumped 2.7% Friday but still is up 46% this year. Britain’s key index sank 0.4% but is up 21% this year.

The Dow index is up 19.7% year-to-date.

Among Friday’s highlights:

* Other tech stocks falling included Motorola, down $1.63 to $63.75; IBM, down $2.38 to $98; and Xylan, down $3.19 to $17.88.

* Among multinational issues, Fluor dropped $1.19 to $49.75, Coca-Cola lost $2.19 to $55.50 and 3M was off $3.63 to $95.75.

* Gold stocks plunged with the metal. Barrick Gold fell $2 to $21.56; Newmont Gold sank $2.88 to $43.44.

* On the plus side, many electric and phone utility shares rallied as investors sought safe havens. Some drug shares also were higher.

* Silicon Graphics rose $1.44 to $17.38 amid indications the struggling company will announce major changes Monday.

Market Roundup, D4