Late Selling Wipes Out Stock Gains

Stocks staged a late retreat Wednesday, wiping out substantial early gains and prompting worries about the market’s direction.

The Dow Jones industrial average fell 10.22 to close at 4,690.15. The blue chip index had risen as much as 55.29 in the first 30 minutes of trading, and was trading with gains of about 30 points until about 2:30 p.m.

Traders said several waves of computer-guided sell programs, primarily in technology and transportation issues, worsened the losses in the final 90 minutes.

“What they’re trying to do is use rallies to take profits,” Leon Brand, global market specialist at NatWest Securities, said of investors. “As fast as everybody wanted to get in, people are wanting to get out.”

Volume on the Big Board was heavy at 374.31 million shares as of 4 p.m., up from 332.22 million on Tuesday. Despite the drop in major indexes, advancers led decliners by about 3 to 2 on the New York Stock Exchange.

Stocks rose aggressively in the morning, along with bonds and the dollar, when Japan announced a program to curb the surge in the yen and encourage Japanese firms to invest in foreign markets.

Some of the stocks that moved substantially Wednesday:

NYSE

Digital Equipment rose 2-3/4 to 43-1/8.

Digital and Microsoft said they will expand their joint development and marketing of computers and advanced networking software for businesses. The arrangement is designed to help Digital’s Alpha microprocessor and Microsoft’s Windows NT operating software. Microsoft’s shares fell 1/2 to 89 in Nasdaq trading.

IBM fell 2-1/8 to 107-1/2.

Hewlett Packard fell 3-1/4 to 72-1/2.

Compaq fell 1/2 to 49-3/8.

Computer stocks fell under heavy profit-taking.

USAir Group fell 1/4 to 8-3/4.

AMR Corp. fell 3-1/8 to 71-5/8.

Delta Airlines fell 4-1/2 to 74-3/8.

Southwest Airlines fell 7/8 to 27-7/8.

UAL Corp. fell 4-3/8 to 144-1/8.

Salomon Brothers cautioned that these issues may have reached their seasonal peak, noting that weak traffic growth and weak future bookings have prompted another round of rate airfare sales, and that airlines were unlikely to win more concessions from their labor forces.

NASDAQ

MCI Communications rose 5/8 to 24.

The telecommunications company said it will cut its work force by between 2,500 and 3,000 jobs, and that it would take a restructuring charge of $600 million to $800 million in the third quarter.