Dow Average Slips 16 on Inflation Fears : Market Overview

Heavy selling of health care and technology stocks and concern about inflation pushed stocks lower. The Dow Jones industrial average fell 16.21 points to 3,426.74.

* Despite negative inflation news, bond yields fell slightly.

Stocks

The Labor Department’s report, showing that consumer prices rose a moderate 0.3% in February, was a factor in stocks’ decline.

A Federal Reserve report showing industrial production rose 0.4% in February helped stocks stage a temporary comeback, and the Dow Jones industrial average moved briefly into positive territory before sinking lower at mid-afternoon.

Jack Conlon, market strategist at Rothschild Inc., said stocks could resume climbing as early as next week.

Among the market highlights:

* Medical device stocks dropped sharply after a front-page story in Wednesday’s Washington Post suggested that the Clinton Administration may impose price controls. Medtronic dropped 4 1/4 to 71 3/4, and U.S. Surgical fell 2 3/8 to 58 1/4.

* Drug stocks continued their decline under heavy liquidation by institutional investors. Merck fell 1 1/8 at 36 5/8, Glaxo declined 3/8 at 18 1/4, and Johnson & Johnson slipped 1 5/8 at 40 3/8. Pfizer fell 1 5/8 to 58 3/8.

* Technology stocks fell following the Commerce Department’s decision Tuesday to impose unexpectedly light tariffs on Korean chip imports. Micron Technology fell 4 to 23 7/8, and Texas Instruments declined 2 3/4 to 59 5/8.

* Western Digital, which makes disk drives, fell 1 1/2 at 6 5/8 in active trading after the company said pricing pressures would keep its third-quarter earnings “significantly below” analysts’ estimates of 20 cents to 26 cents a share.

* Oil stocks were higher as investors looked for safe havens from inflation. Atlantic Richfield rose 1 to 118 7/8, while Chevron added 1 3/8 to 79 1/8.

Overseas, London’s FTSE-100 index closed 29.4 points lower at 2,889.9, while Frankfurt’s DAX 30-share index lost 12.75 points to 1,685.08. In Tokyo, the Nikkei index closed up 205.07 points, or 1.14%, at 18,173.37.

Other Markets

Negative inflation news inspired a brief selloff in the Treasury market, but bond prices managed to eke out slight gains amid efforts by Federal Reserve Chairman Alan Greenspan and the Clinton Administration to contain the damage.

The yield on the Treasury’s main 30-year bond eased to 6.865% from 6.87% late Tuesday. It price, which rises when yields fall, rose 1/16 point, or 63 cents per $1,000 in face amount.

The dollar ended narrowly mixed against most major currencies in dull trading on the eve of an important meeting of Germany’s central bank policy making committee at which interest rates could be cut.

Gold rose 20 cents on New York’s Commodity Exchange, where bullion for current delivery settled at $329.30 an ounce.

Oil prices got off to a lower start Wednesday morning in reaction to weekly supply figures released the night before, but were able to recover by midday

April delivery of light, sweet crude oil settled at $20.17 per barrel, up 4 cents, at the New York Mercantile Exchange.

Market Roundup, D6