MONEY SAVVY WEEKEND : Bond Yields Fall as Stocks Dive; Oil Prices Surge

Investors fled to the relative safety of Treasury securities Thursday as stocks suffered another deep sell-off. Meanwhile, oil prices surged to a 2 1/2-year high amid stronger-than-average demand for gasoline.

On Wall Street, the Dow industrials tumbled 205.48 points, or 2%, to 10,318.59, in a sell-off that accelerated late in the day after Microsoft President Steven Ballmer called the valuations of many technology stocks “absurd.”

The tech-heavy Nasdaq composite slid 108.33 points, or 3.8%.

Losers swamped winners by 21 to 9 on the New York Stock Exchange in heavy trading. On Nasdaq, losers had a 26-12 margin over winners.

Smaller stocks didn’t fare as badly as major tech names and blue chips. The Russell 2,000 index lost 1.7%.

Still, analysts noted that the broad market has been weakening in the last month and that only this week has the selling hit many big-name stocks. “The market is under the weight of so many threats right now,” said Scott Bleier, strategist at Prime Charter Ltd., citing interest rate worries and the dollar.

But interest rates--at least on Treasury bonds--suddenly are going in a direction stock investors might appreciate. The yield on the bellwether 30-year Treasury bond slid to 5.99% on Thursday, the lowest since Aug. 27, from 6.09% on Wednesday.

Despite the still-strong U.S. economy, Treasuries are gaining from a “flight to quality,” analysts said, amid concern about the market and year 2000 computer problems.

Whether the declines in yields mean the market increasingly expects the Federal Reserve to refrain from raising short-term interest rates again isn’t clear, experts say. The Fed meets Oct. 5.

Bonds’ strength might have helped buoy the battered dollar Thursday. It edged up slightly against the Japanese yen, to 103.95--although it was higher before Treasury Secretary Lawrence Summers appeared to downplay the need for coordinated action among major nations to weaken the yen.

In commodity trading, November crude oil futures rose 75 cents, or 3.1%, to $24.87 a barrel in New York, highest since January 1997, on news that U.S. gasoline demand rose to 8.9 million barrels a day last week, 4% higher than the average for the year.

Energy Secretary Bill Richardson said the White House and his department are taking seriously a proposal to sell crude oil from U.S. reserves to combat rising prices.

Among Thursday’s highlights:

* Tech stocks plummeting included Microsoft, down $4.88 to $91.19; Intel, off $5.31 to $77.50; Apple, down $7 to $63.31; IBM, off $3.19 to $122; Hewlett-Packard, down $4.31 to $94.38; Dell, down $3.06 to $43; and Texas Instruments, down $3.63 to $83.

* Internet shares also fell. Many had recently been rebounding despite the broad market’s slide. EBay dropped $10.88 to $138.25, Yahoo lost $5.75 to $173.75 and America Online fell $3.50 to $87.50.

* Among blue chips, Coca-Cola fell $1.50 to $50.94, AlliedSignal lost $3.88 to $59.75, Johnson & Johnson slid $2.13 to $91.13, DaimlerChrysler dived $3.94 to $66.25 and Gillette slumped $2.06 to $37.75.

* Georgia-Pacific dropped $5.81 to $38.81 after its chief financial officer resigned. Some analysts immediately trimmed earnings estimates for the paper company.

* On the upside, Tricon Global Restaurants rose $5.06 to $43.75 after saying profit will exceed forecasts partly on higher Pizza Hut sales and that it will buy back as much as $350 million of stock.

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Market Roundup, C12

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* BEARISH BUZZ: Microsoft leader’s comments on tech issues trip market. A1