NEW YORK, JULY 20 -- The Dow Jones industrial average shed 32 points today after a sudden free fall in the stock of Texas Instruments triggered a late sell-off by program traders.

With barely half an hour left in trading, Texas Instruments slipped into one of the notorious black holes that have recently hit the market, plunging from 38 per share to 32 3/4 in a matter of minutes after the company announced that it may post a loss in the third quarter.

The free fall in Texas Instruments is only the latest massacre of individual stocks on downbeat earnings news, but it is the first to spill over into the broad market.

Thursday, losses in thrift-holding company HomeFed Corp. affected other California banks, including the big money-center institutions. Other casualties included Tandem Computer, Lotus Development and Polaroid.

The plunge in the last hour capped an otherwise up day that saw the Dow reach 3006 at midday as short sellers rushed to cover exposed positions before the expiration of July index future contracts.

At the close, the Dow stood at 2961.14, down 32.67, while declining issues outpaced advancing ones by about 3 to 2. New York Stock Exchange volume was moderately active at 177 million shares.

Chipmaker TI's stock began to collapse when the company unveiled second-quarter earnings near the low end of expectations and predicted a possible loss for the third quarter. The stock closed the day of heavy trading down 5 3/4 at 33 1/8 -- a drop of nearly 15 percent.

The rest of the semiconductor industry also was hard hit. Motorola skidded 3 1/4 to 81 1/2, Advanced Micro Devices lost 1 3/4 to 7 1/4, Western Digital gave up 1 1/8 to 12 1/8, Applied Materials surrendered 1 1/8 to 35 1/4 and Intel dropped 2 5/8 to 45 1/8.

Some computer issues also were caught in the downdraft. Compaq Computer was off 3 1/4 at 60 1/4, Honeywell lost 3 7/8 to 104 and even IBM dipped 2 3/8 to 117 5/8.

Hugh Johnson, a strategist at First Albany, said the market seems to be ignoring a steady stream of solid earnings reports while reacting dramatically to the disappointments -- a sign in his mind that the market has already become significantly overvalued and "needs much more positive news than is currently available" to push it higher.

The Dow transports lost 13.14 to 1159.49, while the interest-rate-sensitive utility average fell 1.39 to 202.15, finally violating important, closing-basis technical support dating to the late-April lows and posting a new low for the year as well.

Among broad stock indexes, the Standard & Poor's 500 was down 3.71 at 361.61, the NYSE Composite down 1.73 at 197.65, the Value Line down 1.33 at 285.18, the Amex Market Value down 1.39 at 360.45 and the Nasdaq Composite down 2.90 at 455.27.