Microsoft Decline Spurs Late-Day Market Selloff

A selloff in technology shares, triggered by an announcement of delays in the rollout of Microsoft’s Windows 98 software, undermined a rising stock market Monday as sentiment turned bearish in the final hour of trading.

The Dow Jones industrial average fell 21.83 to 7,721.14, erasing the nearly 52-point gain from earlier in the day. Broad-market indexes also weakened late in the day.

The steep fall in Microsoft shares ignited the late-day decline, and other bellwether technology stocks soon followed, including Intel, IBM and Cisco Systems.

“In the last hour or so, Microsoft fell, and that had a negative impact on the entire tech sector and then on much of the market,” said Brian Belski, a technical analyst at Dain Bosworth in Minneapolis.

Microsoft shares started the day lower on a Barron’s report that said the software giant’s stock was overvalued and that the company may have a hard time dominating the industry in the future.

But the big decline came at midafternoon, when Microsoft said its Windows 98 software will come out three months later than expected to give testers more time to root out bugs in the program.

Besides the Microsoft news, there was little else moving the market Monday. Most investors were cautious with their trades ahead of today’s session, when the government reports on consumer prices for August and the Federal Reserve releases its monthly report on industrial production.

Some of the stocks that moved substantially or traded heavily Monday:

NYSE

Sara Lee, up 6-1/16 at 48-5/8.

The company announced it will undertake a three-year restructuring, under which it will raise $3 billion in cash by selling some assets and using outsiders for some work to reduce expenses.

American Home Products, down 3-11/16 at 73-1/4.

Interneuron Pharmaceuticals, down 1 at 16 on the Nasdaq.

American Home Products announced plans to pull weight-loss medications Redux and Pondimin from the market. American Home Products manufactures and markets Pondimin. Interneuron makes Redux, but it’s marketed by American Home Products.

King World Productions, up 1-7/16 at 40-3/4.

King World said that Oprah Winfrey will continue to host and produce The Oprah Winfrey Show. Under the agreement with Winfrey’s Harpo Productions Inc., King World said it will retain the exclusive right to distribute the show in first-run syndication through the 1999-2000 season.

NASDAQ

Microsoft, down 7-1/4 at 130-11/16.

The software company said it is delaying release of the next generation of its popular Windows software - Windows 98 - until the spring. In addition, Barron’s reported in its Sept. 15 issue that Microsoft’s stock may be overpriced and said it may find it difficult to dominate the industry in the future.