Profit warnings and analyst downgrades took their toll on tech stocks Tuesday as the Nasdaq composite tumbled 91 points to close at 4,143.22. The Dow Jones industrial average closed up 22 points to 11,260.61.
"In the bigger picture not an awful lot has changed between Friday and today, the bottom line being that for the most part this happens to be a correction and not the beginning of something significant," said Joseph Barthel, chief investment strategist at Fahnestock & Co.
"The market had a relatively good tone because it has become conventional wisdom that rates have peaked for the cycle and if anything you will see the market move higher right up through the (November Presidential) elections and may be even after that."
Intel (INTC) fell $4.69 to $69.25 after it absorbed a downgrade from U.S. Bancorp Piper Jaffray.
Advanced Micro Devices (AMD) shed $2.88 to $34.63 and IBM (IBM) lost $2.06 to $131.56.
WorldCom (Nasdaq: WCOM) fell $3.19 to $33.75 after announcing it has agreed to acquire Intermedia Communications Inc. (Nasdaq: ICIX), up $8.61 to $31.48, in a deal worth $3 billion in cash and stock. WorldCom will also take on $3 billion in debt through the deal.
Xpedior (Nasdaq: XPDR) joined the pack of plunging Internet services companies Tuesday after it announced third quarter revenue will decline about 10 percent. Its shares closed off $2.56 to $8.25.
Other Internet consultants crumbling on customer defaults included iXL (Nasdaq: IIXL), down $1.38 to $7, and Viant (Nasdaq: VIAN) which closed off 19 cents to $8.
Among widely held PC stocks, Dell (DELL) lost $2.06 to $131.56; Compaq (CPQ) trimmed 94 cents a share to $32.69; Apple Computer (AAPL) fell $1 to $62.44 and Gateway (GTW) closed off $4.71 to $63.97.
Ciena (Nasdaq: CIEN) plunged $13.94 to $216.19 after it said a customer won't be able to pay up the $28.2 million it owes. The company will see a charge of 6 cents a share in its fourth quarter as a result.
Yahoo! (YHOO) led the Internet sector higher, gaining $3.29 to $117.23. America Online (AOL) trimmed 50 cents to $57.25 while Amazon.com (AMZN) and eBay (EBAY) closed up $4.19 and $4.63 a share, respectively. Lycos (LCOS) closed off $1.63 to $73.
GoTo.com (Nasdaq: GOTO) gained $3.81 to $23.31 after announcing it has signed a $50 million, multi-year with AOL to get its pay-for-placement search service displayed on AOL's properties.
Oracle (ORCL) shed $1.56 to $91.06 while Sun Microsystems (SUNW) and Microsoft (MSFT) closed off $3.56 and 6 cents a share, respectively.