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Dow drowns in tech sell-off

Blue chips shed over 130 points in second straight day of steep declines

October 24, 1997: 5:37 p.m. ET

NEW YORK (CNNfn) - Tumbling technology stocks and lingering concerns over the fate of the Hong Kong market dealt a heavy blow on U.S. stock markets Friday with the Dow industrials suffering severe losses for the second day in a row. [INLINE] Dow Jones industrial average closed 132.36 points lower at 7,715.41 after starting the day as high as 7,939.61. The blue-chip index lost 0.75 percent Friday and ended the week 1.69 percent, or 132.61 points, below last week's close. [INLINE] In broader markets, the technology-laden Nasdaq was down 20.33, or 1.22 percent, at 1,650.92, 15.96 points lower on the week. The S&P 500 index fell 9.06 at 941.63, ending the week 2.54 points down. [INLINE] On the New York Stock Exchange declines led advances, 1,508 to 1,337, with almost 680 million shares changing hands. [INLINE] Friday's market collapse was triggered by a heavy sell-off in technology stocks after several downgrades in semiconductor stocks and a plant-delay announcement by Intel. [INLINE] Spectrian (SPCT) led losers trading on the Nasdaq, plunging 15-7/8 to close at 26-1/4. The stock was downgraded by Morgan Stanley to "neutral" from "outperform" and by UBS Securities to "hold" from "buy" on concerns over future orders. Those worries appeared to outweigh the company's report of 60 cents per share in quarterly earnings, beating Wall Street estimates of 53 cents. The company makes power amplifiers for wireless communications firms. [INLINE] UBS downgraded several other semiconductor stocks, because of concerns over the Asian currency crisis' effect on sales. Among these stocks, Applied Materials (AMAT), closed 3-3/4 lower at 33-1/4, topping the most actively traded list on Nasdaq with over 61 million of the company's shares changing hands. Novellus (NVLS), down 3 at 48-3/8, and CFM Technologies (CFMT), off 5-5/8 at 23, were also in the list of downgraded companies and suffered declines. [INLINE] Other technology stocks that took a beating Friday included Intel (INTC), down 1-7/8 at 80, after the company said it would postpone the opening of a $1.3 billion Texas semiconductor plant. Intel said a decline in demand for "flash" memory chips was the reason behind the delay. The plant is now expected to open in late 2000. [INLINE] Earlier in the day, an almost 7 percent gain in Hong Kong's Hang Seng index following Thursday's record point decline spread over into European markets and later also on Wall Street. The Hang Seng gained 718.04 points to close at 11,144.34 in what was its second-biggest one-day point gain. [INLINE] But the good news from Asia was soon outweighed by concerns over the future direction of the Hong Kong market. This, coupled with Wall Street's technology woes, led to a tumble in other world markets too. In London, the FTSE 100 index closed off 21.3 at 4,970.2, and in Paris the CAC-40 ended down 7.84 at 2,849.03. Frankfurt's DAX, the only major index to finish the day in positive territory, gained 73.61 to 4,050.87. [INLINE] U.S. bond markets also had a choppy day Friday as the Hong Kong-inspired flight to quality came to an abrupt end. The benchmark 30-year Treasury closed 12/32 higher to yield 6.28 percent after testing both sides of unchanged. [INLINE] Gold company shares weighed on the market as well, down steeply following news of a Swiss proposal to sell 1,400 metric tons of gold as part of an overhauling of the Swiss constitution. Shares of Newmont Mining (NEM) fell 3-3/8 to 41-9/16, Barrick Gold (ABX) dropped 1-15/16 to 21-5/8, and Homestake Mining (HM) was off 1-7/16 at 13-13/16. [INLINE] Among other market movers, cosmetics giant Avon (AVP) was up sharply after its stock was upgraded by several Wall Street firms. Smith Barney raised its rating of the company to "buy" from "outperform," Goldman Sachs raised it to "outperform" from "perform" and PaineWebber raised it to "attractive" from "neutral." Avon shares closed 6-7/8 higher at 73-3/4. [INLINE] Other net gainers included Amazon .com (AMZN). Shares in the on-line book retailer rose 6-5/16 to 60-5/16 because its third-quarter loss was lower than expected. [INLINE] Topping the NYSE's most-active-shares list: Boeing (BA), which slipped 9/16 to close at 48-1/2. The company reported an expected loss of 72 cents a share in the third quarter, compared with a profit of 48 cents in the third quarter last year. Boeing's loss included a $1.6 billion charge related to severe production delays. [INLINE] IBM (IBM), after posting gains early in the day, succumbed to the technology sector's decline and lost 2-1/4 to 98-1/8. Among other stocks that took a hit were Texas Instruments (TXN) which plummeted 9 to close at 111-7/8. [INLINE] Computer retailer Gateway 2000 (GTW) shares were down 1/2 at 30-3/4 after the company reported a loss of $107.1 million, or 68 cents a share, after the market close Thursday. The loss included a $113.8 million pre-tax charge and compares with a profit of $60.7 million, or 39 cents a share, in the year-ago period. Link to top [INLINE] --by staff writer Malina Poshtova Zang djia Dow Industrials