Profit Taking Snuffs Rally; Dow Off 20.22 : Computer Issues Weaker on Dour Profit Forecasts

NEW YORK â€”  Stock prices closed lower Wednesday, with a weak dollar and profit taking ahead of the holiday weekend forcing the Dow Jones industrial index well below the key 2,000-point level.

The Dow, which failed to hold an early rally that took it to 2,012.27, erased Tuesday’s 18-point gain and closed 20.22 lower at 1,978.12.

Declining issues outnumbered advances by about 5 to 3 in the daily tally on the New York Stock Exchange, with volume totaling 151.81 million shares, down slightly from Tuesday’s 152.69 million. The NYSE’s composite index fell 1.00 to 146.22.

Analysts noted that the dollar had shown signs of steadying in foreign exchange, which sparked a rebound in bond prices in Tuesday’s activity.

Wall Streeters were generally pleased with the government’s report Tuesday that the index of leading economic indicators rose 0.9% in February. That was taken as a signal that the economy was neither slumping nor dangerously strong.

The market weakened as the session passed, however. Brokers said traders seemed reluctant to hold on to big positions with a long holiday weekend approaching.

The market will be closed in observance of Good Friday. The Labor Department is scheduled to report on the employment situation for March that day, but stock and bond traders will have to wait until Monday to respond to it should it contain any surprises.

Computer stocks were particularly weak, based on bleak prospects for first-quarter earnings and a government report that confirmed the pessimistic outlook.

Computer Stocks Skid

During most of the trading day the Dow lacked clear direction, and analysts predicted that investors may have sold off part of their portfolios ahead of this week’s early closing for Good Friday.

The 0.8% drop in factory orders in February, reported Wednesday by the Commerce Department, showed orders for computers to be weak even though actual shipments are strong.

The big losers among computer stocks were Digital Equipment Corp., off 2 5/8 to 102 3/4 in active trading; Compaq Computer Corp., down 1 3/4 to 48 5/8, and Texas Instruments Inc., down 1 to 47.

Losers elsewhere among the blue chip and glamour stocks included Merck, down 2 1/2 at 157 1/2; General Electric, down 7/8 at 40; American Telephone & Telegraph, down 3/8 at 26 1/2, and Du Pont, down 1 3/8 at 79 7/8.

Texaco led the NYSE active list, off at 47 3/4 on turnover of nearly 3 million shares. The stock jumped 3 points Tuesday, when Kohlberg, Kravis, Roberts & Co. said it would seek regulatory clearance to buy as much as 15% of the shares.

J. C. Penney added 1 to 48. The company raised its quarterly dividend to 50 cents a share from 37 cents.

Fur Vault, traded on the American Stock Exchange, fell 3/8 to 2. The company reported sharply lower quarterly earnings and suspended its dividend.

Tokyo Stocks Soar

The Wilshire index of 5,000 equities closed at 2,574.751, down 16.337.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 181.72 million shares.

Standard & Poor’s index of 400 industrials fell 2.33 to 299.37, and S&P;’s 500-stock composite index was down 2.00 at 258.07.

The NASDAQ composite index dropped 1.18 to 371.38. At the Amex, the market-value index closed at 293.67, off 0.66.

In foreign trading, Tokyo stocks soared Wednesday to their highest level since the Oct. 19 global market crash. The stocks rose for the third straight day as the Nikkei 225-share index surged 366.98 to 26,320.07, the second biggest rise so far this year.

In London, the Financial Times 100-share index dropped 8.2 to close at 1,756.9.