Technology stocks lost ground Monday after analysts downgraded a handful of leaders, sending the Nasdaq composite down 104 points to 2,059.39.
The Dow Jones industrial average shaved off 48 points to finish at 10,532.16.
"The tech stocks have moved ahead quite significantly, but let's face it, people have been hurt so badly and lost so much money by the decline that there is a natural tendency to take profits," Jack Shaughnessy, chief investment strategist for Advest, told Reuters.
Downgrade reports for Intel and Oracle Monday both emphasised that while these companies' stocks have skyrocketed over the past two weeks, the recoveries are considered premature because neither company has hit its true bottom.
Companies that slumped after Merrill Lynch analyst Joseph Osha issued a "reality check" for the group are: Intel (Nasdaq: INTC), down $2.11 to $30.32, and communications chipmakers Applied Micro Circuits (Nasdaq: AMCC), down $4.48 to $25.52, PMC-Sierra (Nasdaq: PMCS), off $6.05 to $38.76, and Vitesse Semiconductor (Nasdaq: VTSS), off $2.33 to $32.44.
Advanced Micro Devices (NYSE: AMD) lost $1.40 to $27.60, and IBM (NYSE: IBM) closed off $2.83 to $112.
It's still early in Oracle's (Nasdaq: ORCL) fourth quarter, but Lehman Brothers sounded alarm bells, partially blaming Sun Microsystems' earnings report last week. Oracle fell $2.60 to $17.15, while Sun (Nasdaq: SUNW) dropped $2.14 to $17.57. Microsoft (Nasdaq: MSFT) slid 75 cents to finish at $68.25.
Also Monday, Webvan shares soared 166 percent, closing at 16 cents after trading as high as 30 cents at one point. The stock for the struggling online grocer had closed Friday at 6 cents. The company didn't announce any news although the board of directors was scheduled to meet Monday for the first time since Chief Executive George Shaheen resigned.
Josh Peters, a stock analyst with mutual-fund research firm Morningstar, speculated that it might be a so-called short squeeze, in which investors who shorted the stock to profit when it would fall thought it wouldn't go lower than 6 cents and moved to cover themselves. Besides Shaheen's resignation, Webvan also faces Nasdaq delisting.
"That's the only other reason I can think of...besides insanity," said Peters, who follows the grocery industry.
Cisco Systems (Nasdaq: CSCO) shaved off $1.82 to $17.33. Nortel Networks (NYSE: NT) dropped $1.01 to $15.94, and Lucent Technologies (NYSE: LU) closed off 31 cents to $9.20.
Among widely held PC stocks, Dell (Nasdaq: DELL) shed 77 cents to $29.35, Compaq (NYSE: CPQ) lost 86 cents to $20.65, Gateway (NYSE: GTW) dipped 12 cents to $18.04 and Apple Computer (Nasdaq: AAPL) fell 79 cents to $24.25.
Shares of Exodus Communications (Nasdaq: EXDS) clipped 10 cents to $9.87 after spending much of the day in the black on take-over rumors.
America Online Time Warner (NYSE: AOL) shed $1.09 to $47.60. eBay (Nasdaq: EBAY) fell $3.70 to $46.95, and Amazon.com (Nasdaq: AMZN) gained 42 cents to 16.20. Yahoo (Nasdaq: YHOO) lopped off $1.89 to $17.96, and CMGI (Nasdaq: CMGI) finished down 44 cents to $2.53.
Telecommunications company SBC Communications (NYSE: SBC) fell 75 cents to $39.25 after it matched already lowered expectations for its first quarter, but warned that the rest of 2001 would fall short of estimates.
ZDII staff and Reuters contributed to this roundup.