Falling Computer Stocks Fuel Dow’s Retreat

Computer-related shares tripped again Wednesday as profit worries intensified, weighing down the stock market as investors braced for new clues on inflation in Friday’s key employment report.

The Dow Jones industrial average fell 42.49 points to 7,269.66. Broader indicators also retreated as interest rates edged higher in the bond market.

Big-name technology shares, besieged by a series of disheartening profit forecasts that began with Friday’s warning from Intel, started the day higher.

But the group faltered amid rumors that Gateway 2000 is set to warn that business has been slow this quarter. The computer maker is scheduled to make a presentation to securities analysts today.

The broad market, meanwhile, slid into the holding pattern that often precedes the government’s monthly reading on payroll and wage levels - a major indicator of inflation trends.

“You’ve got the jobs data on Friday and the most popular sector being hit, so you have general nervousness,” said Larry Rice, chief investment officer at Josephthal, Lyon & Ross.

Declining issues outnumbered advances by a 7-to-6 margin on the New York Stock Exchange, where volume was a modest 466.71 million shares as of 4 p.m., down from 526.62 million in the previous session.

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

NYSE

Great Western Financial, up 1-3/9 at 48-3/4.

H.F. Ahmanson & Co. dropped its hostile takeover bid, paving the way for Great Western to pursue a friendly merger with another savings and loan bank. Ahmanson, based in Irwindale, Calif., pulled its offer after a court on Tuesday denied a motion to delay a special meeting of Great Western stockholders to vote on merging with Seattle-based Washington Mutual.

Iomega, up 1 at 20-1/4.

The disk-drive maker’s shares rose as another takeover rumor cropped up, this time involving Hewlett-Packard as a possible acquirer, the Dow Jones News Service reported.

NASDAQ

Applied Materials, up 7/16 at 62.

The manufacturer of equipment used to make semiconductors filed suit against AG Associates alleging infringement on two Applied Materials patents. The suit was filed in U.S. district court in San Jose, Calif.

Unify, up 9/16 at 2-15/16.

Pioneer Electronics of Japan has chosen Unify’s Vision software as a development tool allowing engineers to monitor and track circuit design data. Unify is based in in San Jose, Calif.

Brite Voice Systems, up 1-5/16 at 9-5/16.

The provider of voice processing systems received a contract worth $2 million from Turkcell, a mobile network operator in Turkey.