Microsoft share fall drags down Nasdaq

Further lubricating the recent downhill run of hi-tech stocks in New York, shares in Microsoft took a severe tumble yesterday following reports that its revised version of its Windows 95 operating system might be late in coming to the shops.

Apparently reacting to fears that the new Windows 95 would not be available until after the next Christmas shipping season, Microsoft saw its shares fall by more than 5 per cent in New York trading.

The deterioration in Microsoft's short-term prospects delivered another blow to the already fragile hi-tech sector. By midday yesterday, the technology-heavy Nasdaq exchange was down a significant 15 points.

Although the Nasdaq had been slipping through several trading sessions, Microsoft's troubles threatened a ripple effect with investors fearing negative consequencies for the wider computer sector. Among stocks that were also hit yesterday were Intel, Hewlett Packard, Dell and IBM.

At lunch Microsoft was down $41/2 to $891/2, leaving the company's stock at its lowest level since January. Microsoft was also the heaviest-traded stock on already nervous Nasdaq.

The decline in the Nasdaq added to wider unease on Wall Street as investors awaited today's meeting of the Federal Reserve's Open Market Committee. There is general anticipation that Fed chairman Alan Greenspan will finally nudge the committee to increase interest rates in the United States for the first time in 15 months. Even so, the expected tightening in monetary conditions had apparently been priced into most stocks in the Dow Jones industrial average which, after fairly strong early gains, was hovering around the unchanged mark.