And when a host of companies fed the fears by announcing weaker earnings forecasts and swollen inventories, the entire sector was punished.

Auto Sales Slump The automobile industry, affected by swollen inventories, has already reduced production at some factories.

These programs to reduce swollen inventories had lifted sales in the three previous years.

The plan, which gave car buyers the price breaks that normally go only to company employees, helped G.M. reduce its swollen inventories of unsold cars.

In the last two months, car output has fallen by an annual rate of 1.1 million units as manufacturers cut production to reduce swollen inventories.

In some towns, the swollen inventory is partly explained by a glut of higher-end homes.

Some analysts said they were also encouraged by evidence that new financing incentive plans were spurring sales of new cars, thereby reducing swollen inventories.

The implication is that more staff, better scholarship, more intensive research activities and so forth might flourish with the divestiture of swollen inventories.

And in January, Chrysler was forced, along with other domestic auto makers, to stop production at several plants in order to dissolve swollen inventories.

Adding 75,000 shares to an already swollen inventory was the kind of move most specialists would avoid.