FINANCIAL MARKETS : Stocks Fall on Weak Economic Data

Stocks ended broadly lower Monday as investors looked at some weak economic data and worried anew about third-quarter corporate profits.

Technology stocks and small stocks in general led the market decline on the first day of the fourth quarter.

Meanwhile, bond yields fell as the downbeat economic news revived hopes that the Federal Reserve Board will lower interest rates soon.

On Wall Street the Dow Jones industrial average fell 27.82 points to 4,761.26.

Declining issues outnumbered advances by about 13 to 9 on the New York Stock Exchange in relatively slow trading. The selling was more pronounced in the Nasdaq market of mostly smaller stocks, where losers swamped winners by nearly 2 to 1.

Stocks started the session down and maintained that course as successive economic reports showed weakness in the economy.

The Commerce Department said Americans’ personal income was unchanged in August, the weakest showing in three months. Although spending climbed a larger-than-expected 1%, much of that increase was attributed to purchases of cars as dealers offered discounts to pare inventories.

In addition, the National Assn. of Purchasing Management said its index of U.S. manufacturing growth rose to 48.3% from 46.9% in August. Although the index was higher, any reading below 50% indicates that activity at the nation’s factories is declining.

The data shows “the economy is all right but that there will be a period of much slower growth than anticipated,” said Michael Metz, strategist at Oppenheimer & Co. in New York. That concern about economic growth is translating into rising fears about corporate profits, Metz noted.

Earnings reports for the just-concluded third quarter are due out over the next few weeks. There have been indications from some large companies recently that stock analysts’ estimates may be too optimistic.

Some traders said it was disturbing that stocks couldn’t rally Monday despite the fresh decline in bond yields. The yield on the benchmark 30-year Treasury bond fell to 6.47% from 6.50% on Friday, ending just above 19-month lows.

Among Monday’s highlights:

* In the tech arena, Micron Technology lost 2 1/4 to 77 1/8, Microsoft fell 2 1/4 to 88 1/4, Cisco Systems tumbled 3 to 66 and Ascend Communications slid 4 to 76.

The Nasdaq composite index, heavy with tech issues, slumped 15.97 points, or about 1.5%, to 1,027.57.

“Investors with weak knees are bowing out of technology stocks,” said Don R. Hays, director of investment strategy at Wheat First Securities in Richmond, Va.

* Buyers continued to move into stocks whose earnings growth tends to be more predictable.

Drug giant Merck rose 7/8 to 56 7/8 after the company said the Food and Drug Administration gave it the green light to market its non-hormonal Fosamax drug for treatment of osteoporosis.

Other classic growth stocks that advanced included Mattel, up 1/2 to 29 7/8; Nike, up 5 1/2 to 116 5/8, and Hershey Foods, up 5/8 to 65.

* Utility stocks also were broadly higher. The Dow utility index gained 1.12 points to 215.40.

In currency trading, the dollar rose against the Japanese yen as traders expected the Group of Seven leading industrial nations to signal support for a stronger dollar when they meet Saturday.

In late New York trading, the dollar ended at 100.35 Japanese yen, up from 99.73 yen on Friday.

In commodities trading, oil and natural gas prices rose as the expected arrival of Hurricane Opal along the refinery-crowded Gulf Coast forced the temporary shut-off of some production.

In foreign markets, London’s FTSE-100 index added 12 points to 3,520.2, and Tokyo’s Nikkei 225-index lost 173.22 points to 17,739.84.