Dow Loses 21 Points; Tech Shares Have a Mixed Day

Blue-chip stocks ended a volatile session sharply lower Wednesday, but widely divergent performances by computer-related shares left broad indexes mixed.

The technology-laden Nasdaq index edged higher despite a drop in Intel, which slumped 5 3/4 to 50 in a record volume of trading.

The Dow Jones industrial average ended 21.32 points lower at 5,066.90, erasing nearly half of Tuesday’s 44-point gain. In the broader market, advancing issues led decliners 1,207 to 1,101 on heavy volume of 458 million shares on the New York Stock Exchange.

“People are very nervous about earnings and the lack of a budget resolution,” said Philip Orlando, chief investment officer at Value Line Asset Management.

High-tech bellwether Intel reported weaker-than-expected fourth-quarter results after the market closed on Tuesday. On Wednesday, more than 68 million of its shares changed hands, a Nasdaq record. The previous Nasdaq record was 56 million shares, set on July 19, also by Intel.

The microchip maker posted fourth-quarter net earnings of 98 cents per share. That was well above the 43 cents of last year, which required a $475-million charge to replace flawed Pentium chips, but below analysts’ estimates of $1.10 a share. Intel blamed falling prices and weaker demand for motherboards for the fourth-quarter results and said its first-quarter revenue would be flat.

Intel has about 822 million outstanding shares, bringing its loss for the day to $4.73 billion. Its total market value is $41.1 billion.

Intel chips power personal computers using Microsoft Windows operating software, so a slowdown at the chip level could foreshadow weakness for the company, the world’s biggest software maker. Machines with Intel chips and Windows software account for 80% of the personal computer market.

Microsoft, which is due to report earnings today, fell 1 1/2 to $84.87 1/2 in Nasdaq trading.

Other computer stocks attempted a recovery around midday after Barton Biggs, an influential market strategist at Morgan Stanley & Co., said technology stocks may be ending the first stage of a bear market and that he sees little downside ahead for that sector.

But Biggs’ comments were not enough to pull the entire sector higher, and computer stocks ended mixed. On the Big Board, IBM rose 1/8 to 87 1/8, Compaq dropped 2 3/4 to 44, and Hewlett-Packard fell 2 3/8 to 76 3/4.

The Nasdaq index finished up 2.43 points at 998.30.

“It was really amazing to see the scattered and divergent action” in the technology group, said Richard McCabe, Merrill Lynch & Co.’s chief market analyst.

Apple Computer fell 9/16 to 34. After Wednesday’s close, Apple reported a first-quarter loss of $69 million, or 56 cents a share. Apple also announced plans to lay off 1,300 workers. Its stock dropped to 32 1/2 in after-hours trading.

Sun Microsystems rose 3 to 44 7/8 after reporting better-than-expected earnings on Tuesday.

Bond yields fell for a second day, helping banking stocks, despite another breakdown in Washington’s budget talks. The yield of the 30-year Treasury bond fell 0.04 percentage point to 6.01%.

Among market highlights:

* Dow 30 component Minnesota Mining & Manufacturing lost 3 5/8 to 63 5/8 after warning that its fourth-quarter income, excluding restructuring charges, would fall below last year’s level.

* Retailing stocks fell after Wal-Mart said it will post lower earnings for the first time since the retailer went public in 1970. Wal-Mart fell 2 1/8 to 20 3/8, topping the NYSE actives list with a trading volume of more than 12 million shares. Sears lost 2 1/2 to 40, and Dayton Hudson fell 2 5/8 to 70 1/2.

* Among banking stocks to benefit from lower yields--as well as encouraging earnings reports--were Citicorp, up 1 1/8 to 69 3/8, and Chase Manhattan, up 1 to 61 7/8.

* USAir gained 2 1/4 to 14 1/2 one day after the airline named industry veteran Stephen Wolf chairman.

* Helene Curtis Industries soared 6 5/8 to 40 3/4 on takeover speculation, although one analyst said the company is not a likely target for a hostile bidder.

The dollar, meanwhile, rallied broadly against European currencies on expectations that the Group of 7 industrialized nations may seek a stronger dollar to offset weak European economies. It rose to 1.4705 German marks from 1.4658 on Tuesday, setting a four-month high for a second straight day. The dollar rose to a high of 106.23 yen in Asian trade overnight before running into selling pressure by Japanese exporters, said Brian Garvey, analyst at consulting firm I.D.E.A. Inc. It was trading at 105.65 yen late Wednesday, down from 105.98 on Tuesday.

Oil prices jumped as Iraq affirmed that it was unwilling to meet U.N.-imposed conditions for the country’s first sale of oil since it was hit with an embargo after invading Kuwait in 1990.

Forecasts for cold weather in the Midwest later this week, and refinery problems in Texas and Pennsylvania, also helped support the energy market.

Gulf sources said Saudi Arabia, the world’s largest producer, is confident that Iraqi oil won’t be seen on the world market for a “very long time”--or at least not before the end of the year.

Crude oil for February delivery rose 47 cents to $18.52 a barrel at the New York Mercantile Exchange.