Market Close: Japanese recovery raises inflation worries

Better-than-expected economic news from Japan sent U.S. markets into a tailspin Thursday as the Dow Jones industrial average fell 69 points to 10,621.27 and the Nasdaq composite shed 35 points to close at 2,484.60.

After a year-and-a-half of negative growth, Japan's economy surged 7.9 percent in the first three months of 1999. That might be good news for some American companies, but the prospects of rising inflation and interest rates have investors concerned.

"The worry is that synchronized global expansion is becoming more and more popular," said Hugh Johnson, chief investment officer at First Albany Corp. "Worries about inflation are deepening."

Internet stocks were roughed up again Thursday as Yahoo! Inc. (YHOO) fell 1 5/8 to 144 3/4 and America Online Inc. (AOL) plunged 4 15/16 to 106 1/16. Amazon.com Inc. (AMZN) moved up 1 15/16 to 115 15/16 but Lycos Inc. (LCOS) slid 2 15/16 to 90 1/16. Infoseek Corp. (SEEK) inched up 9/16 to 47.

Network Solutions Inc. (NSOL) gained 6 to 66 1/4 after announcing a new domain search service.

Computer Associates Inc. (CA) dropped 4 7/16 to 47 1/16 after Prudential Securities analyst Douglas Crook cut the stock to a "hold" rating from "accumulate". He predicted CA's share price would drop as low as 50 within a year.

E-mail service provider Critical Path Inc. (CPTH) lost 2 to 46 3/4 after CustomTracks Corp. (Nasdaq: CUST) agreed to dismiss a lawsuit that had accused Critical Path of violating a confidentiality agreement between the two companies. CustomTracks, a developer for security and e-commerce, closed up 15/16 to 47 1/2.

Sun Microsystems Inc. (SUNW) fell 2 1/8 to 59 13/16 after it announced a deal to provide equipment to Motorola for developing an open standards backbone network for wireless Internet services.

Microsoft Corp. (MSFT) lost 2 7/16 to 79 7/8 and Oracle Corp. (ORCL) clipped off 5/8 to end at 26 1/16.

Among widely held PC stocks, IBM Corp. (IBM) dropped 1 3/4 to 115 1/4; Dell Computer Corp. (DELL) chopped off 1 to 34 1/2; Compaq Computer Corp. (CPQ) shaved off 5/16 to 22 3/8; Gateway Inc. (GTW) lost 3 3/16 to 58 13/16 and Apple Computer Inc. (AAPL) ended off 5/16 to 48 1/8.