Dow Slides as Internet Sector Regains Steam

Stocks ended broadly but modestly lower Tuesday, although the Internet sector saw renewed interest from traders.

In commodity markets, prices continued to tumble, pushing key commodity indexes to two-decade lows. Bond yields fell.

On Wall Street, the Dow industrials lost 42.49 points, or 0.5%, to 9,027.98, after trading as low as 8,946 in a midday sell-off.

The Nasdaq composite index, which hit a record high Monday, eased 5.89 points to 2,034.75, after rising as high as 2,060.98.

In the broad market, losers topped winners by 18 to 13 on the New York Stock Exchange and by 24 to 17 on Nasdaq.

“The market’s just tired, bouncing around and trying to deal with 9,000,” said Henry Herrmann, chief investment officer at Waddell & Reed of Overland Park, Kan.

Much of the intraday volatility was fueled by six computer-guided sell programs and three buy programs, according to Birinyi Associates, a research firm.

Analysts also cited ongoing worries about the impeachment showdown in the U.S. House.

Financial stocks were particularly weak even though falling commodity prices suggest continued low inflation--or perhaps deflation--and even though Treasury bond yields declined.

In commodity trading, tumbling futures prices for natural gas and orange juice drove the Bridge-Commodity Research Bureau index down 2.49 points, or 1.3%, to 192.38--the lowest closing level since October 1977.

Last week, the American Gas Assn. reported an unexpected increase in U.S. natural gas inventories during the week ended Nov. 27, leaving them 18% higher than a year earlier. The glut has occurred amid warm Eastern weather.

Prices of many other commodities have been under extreme pressure this year amid ample supplies and weak demand, the latter in part because of Asia’s economic woes.

But that price weakness will keep inflation in check, experts note. That’s good news for bonds, which rallied Tuesday.

The yield on 30-year Treasury bonds edged down to a seven-week low of 5% from 5.03% on Monday. The yield on 5-year T-notes fell to 4.38% from 4.45%.

Asia’s effects continue to show up in the corporate earnings outlook as well. Union Carbide on Tuesday warned that operating earnings will fall short of expectations this quarter in part because of weak Asian demand for chemicals.

Also, specialty chemicals maker Rohm & Haas told analysts its fourth-quarter earnings would be “at the lower end” of estimates because of lower demand.

Carbide shares fell $2 to $42, and Rohm shares lost $1.63 to $32.31.

“Companies with exposure to international markets are seeing an erosion of earnings” expectations, said Richard Caro, a portfolio manager at Summit Bank in New Jersey, which oversees $8 billion.

Among Tuesday’s highlights:

* The tech sector, which led the Nasdaq index to a record Monday, was mixed. Microsoft pulled back $2.38 to $131.19, and Apple fell $1.69 to $32.06.

But many Internet-related shares were off to the races again, including Infoseek, which soared $8.94 to $44.88 as the Net search vehicle prepares to launch its new online “portal” with partner Walt Disney, up 88 cents to $32.

Other winners included Yahoo, up $7.94 to $198.50; Amazon.com, up $13.06 to $204.06; Excite, up $5.44 to $56.63; and DoubleClick, up $4.81 to $37.19.

* Financial stocks losing ground included J.P. Morgan, down $3.25 to $106.56; BankAmerica, down $2.19 to $61.25; and Merrill Lynch, down $3.38 to $69.75.

* Multinational stocks following Union Carbide lower on worries about Asian demand included Procter & Gamble, down $3.63 to $86.75; and Gillette, down $2 to $41.25.

Market Roundup, C13