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MICROSOFT HURTS MARKETS

Stocks were lower this afternoon, led by technology shares, after an otherwise strong earnings report from Microsoft failed to impress investors looking for a blowout performance.

At 3 p.m. the Dow Jones Industrial Average was down 46.21 at 6,044.66.

Broader measures also were negative, with the biggest losses coming in the technology-heavy Nasdaq market amid heavy profit-taking.

Declining issues outnumbered advancers by more than a 3-to-2 margin on the New York Stock Exchange, where volume came to 332.73 million shares, down slightly from Monday afternoon's 336.42 million.

The Standard & Poor's 500 list was down 4.68 at 705.17, the NYSE composite index was down 2.34 at 375.58, and the American Stock Exchange's market value index was down 3.12 at 573.75.

The Nasdaq composite index was down 20.49 at 1,215.92 as investors used two earnings disappointments in the technology sector as an excuse to secure some of their recent profits in computer-related issues.

Microsoft reported after the close of Monday's trading that strong demand for its operating systems and office software produced another record profit.

The profit for the July to September period, Microsoft's first quarter, rose 23 percent to $614 million, or 95 cents a share, exceeding most forecasts. But like IBM's earnings report Monday morning, Microsoft's results failed to beat expectations by as wide a margin as Intel did last week.

Investors also were disappointed this morning by a bigger-than-expected loss from Digital Equipment, which blamed a time-consuming reorganization of its sales force for the poor showing in its first quarter.

Digital was down 5 1/2 at 29 1/2 in active NYSE trading, while Microsoft was down 2 1/8 at 131 7/8 in Nasdaq trading.

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