Intel Spooks Stock Market

March 5, 1998 / 6:00 PM EST / AP

Stocks fell sharply today in their worst showing since early January as a profit warning from Intel dealt a sudden blow to Wall Street's record-setting rebound.

The Dow Jones industrial average slid as much as 133 points before finishing about 94 points lower at 8,445.

The technology-laden Nasdaq composite index tumbled about 2.7 percent a percentage drop more than twice as steep as the Dow's to lead the broad market decline.

Although it was the market's biggest drop since Jan. 9, when the Dow plunged 220 points amid heightened jitters over the economic crisis in Asia, leading stock measures are still boasting some hefty gains for 1998: the Dow is up nearly 7 percent, and the Nasdaq composite is up 9 percent.

After Wednesday's close, Intel announced that its first-quarter profits and revenues have been below expectations due to sluggish orders for its semiconductors. Analysts took the warning as a sign of slack demand for personal computers.

Intel plunged more than 12 percent as the most active Nasdaq issue today, followed by fellow computer-industry bellwethers Microsoft and Dell Computer. Technology shares, pummeled repeatedly since late October amid concerns over their heavy exposure to the economic crisis in Asia, were among the biggest gainers in last month's rally.

There were some soothing counterpoints to the troubling developments in the technology sector, with the government reporting strong factory orders and fewer-than-expected unemployment claims, and major retailers stepping forward today with robust sales reports for February.

Wal-Mart Stores helped cushioned the Dow's fall after the nation's largest retailer reported an 18.3 percent improvement in sales from year-ago levels.

Overseas, Tokyo's Nikkei stock average fell 1.4 percent, Frankfurt's DAX index fell 1.8 percent and London's FT-SE 100 fell 0.7 percent.