Stocks slump as chip outlook turns sourer

NEW YORK--Sullen investors sent stocks lower Monday, forcing theDow Jones industrials down more than 100 points as Wall Streetretreated from last week's optimism about the semiconductor industry.

Uncertainty about the economy and earnings ruled the market afterSalomon Smith Barney reduced profit and revenue targets for Intel andLehman Bros. said the chip maker will cut prices in half on itsPentium 4 processor. The news disturbed investors who last week bidchip stocks higher on bullish comments from other analysts and Intelitself.

"Whenever we think we can go back in and play again, somethinglike this happens," lamented Charles Pradilla, chief investmentstrategist for SG Cowen Securities.

The Dow Jones industrial average finished the session down 111.47at 10,401.31. One of the Dow's biggest losers was Intel, which endeddown $1.40 at $30.28.

The market's broader indicators also declined. The Nasdaqcomposite index fell 32.07 to 2,034.26, and the Standard & Poor's 500index declined 13.87 at 1,200.48.

Stock prices had been expected to trend higher this month asinvestors got a respite after the dismal second-quarter earningsresults most companies released in July. Instead, Wall Street hasbeen stymied as few companies can say they expect business to improveand virtually none can prove that it already has picked up.

"There is just no indication that this market will turn on adime," said Alan Ackerman, executive vice president of Fahnestock &Co.

Chip makers tugged the tech sector down with Intel's chiefcompetitor, Advanced Micro Devices, falling $1.63 to $17.62 andVitesse Semiconductor declining 45 cents to $21.26. The waveringsentiments on the semiconductor industry illustrate the uneasinessthat is pervasive on Wall Street.

"It shows how much tentativeness and uncertainty there is outthere," Ackerman said. "Investors are in no hurry to buy."

Other tech losers included Dow industrial IBM, down $1.67 at$106.51, and Cisco Systems, which slipped 51 cents to $19.54 and isscheduled to release its fiscal fourth-quarter earnings today.

Blue chip losses were widespread. The biggest decliners includedretailers, expected to issue poor July sales results on Thursday.

Radio Shack, which said Monday that July sales slipped 6 percentover last year and was downgraded by Merrill Lynch, tumbled $2.45 to$26.46. Best Buy, another electronics retailer, also suffered,falling $2.68 to $64.75.

Investors were disturbed by the prospect of weak store salesbecause that indicates the economy, two-thirds of which depends onconsumer spending, continues to slump. Even discounters, consideredone of the retailing sector's safer bets, traded lower. Wal-Mart fell89 cents to $54.50.

Other sizable blue chip losses came from 3M, which fell $2.36 to$109.37, and General Electric, which stumbled $1.36 to $41.39.

Gainers tended to be driven by company-specific news. US Airwaysrose 87 cents to $17.75 after Global Airlines said it will offer $1.8billion to acquire it.

Declining issues outnumbered advancers 3 to 2 on the New YorkStock Exchange. Volume came to 809.51 million shares, down from the929.63 million shares traded on Friday.

AP