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Blue chips stocks slide on

tech sector weakness

NEW YORK: Blue chips closed lower Monday as a sell-off in technology stocks stole the spotlight from a blizzard of bank mergers, led by Chase Manhattan Corp. and Chemical Banking Corp.'s corporate marriage.

The Dow Jones industrial average ended 7.40 points lower at 4,594.00.

In the broader market, advancing issues led declines 1,114 to 1,087 on moderate volume of 267 million shares on the New York Stock Exchange.

The technology-laced Nasdaq composite index sank 11.82 points to 1,008.15.

The big news was the batch of banking mergers, highlighted by a $10 billion deal between Chase Manhattan and Chemical, which ignited a rally in bank stocks.

"There were so many bank mergers announced it was as if Wall Street turned into a Las Vegas wedding chapel," said Marty Kearney, a trader at BT Brokerage.

Chase and Chemical agreed to form the nation's largest bank, with nearly $300 billion in assets. Chase topped the NYSE actives list, climbing 6-5/8 to 59-5/8, while Chemical was second with its shares rising 5-3/4 to 60-1/8.

In other banking mergers, National City Corp. said it would buy Integra Financial Corp. ITG.N for $2.1 billion and SFFed Corp. said it will be acquired by First Nationwide Bank in a $250 million deal.

"Marriage can be bliss and this has been the investment du jour," said Alfred Goldman, AG Edwards' technical research director.

"It's good for the stock market," he said. "When a group is rocking and rolling it reminds people you can make money there."

Analysts viewed the planned banking unions positively, saying consolidation in the industry was crucial to allow them to compete more effectively with Japanese and European rivals.

Meanwhile, the technology stocks, which have led the market into record highs since the start of the year, took another pounding as the buying enthusiasm in the shares continued to wane.

Dow index component International Business Machines Corp. lost 2-1/4 to 101-5/8.

Traders said they were not overly concerned by weakness in the technology group, although it has hurt market leadership. Compaq lost two to 46-3/8 and Micron fell one to 71-3/4.

Elsewhere, Intel fell 1-3/4 to 58-5/8, Microsoft shed 4-5/16 to 90-1/16 and Adobe Systems was off 3-3/8 to 55-1/2.

"The technology group has hurt (market) leadership with its pullback, but I expect it to lead the market's way out in a year-end rally," said Paul Rabbit, a quantitative analyst at Oppenheimer & Co.

"The product cycle is so strong I wouldn't take anything seriously until after Labour Day" when more traders return from their end-of-the-summer holidays, Rabbit said.

The Standard & Poor's composite index of 500 stocks fell 0.93 to 208.95. The American Stock Exchange index fell 0.79 to 530.18.

The NYSE Composite index of all listed common stocks fell 0.16 to 300.69. The average share was down 1 cent.

The Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues -- was 5,567.212 down 13.060 or 0.23 percent.-Reuter