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Tech stocks erase early gains

Following the lead of Microsoft, Intel and Hewlett-Packard, tech stocks give up early gains to end the day in the red.

Led by Microsoft, Intel and Hewlett-Packard, tech stocks gave up early gains to end the day in the red.

The Nasdaq composite index was up about 64 points in the morning but closed down 62.54, or nearly 2 percent, at 3,741.22. The Standard & Poor's 500 index dropped 9.69 to 1,439.03.

The Dow Jones industrial average fell 39.22 to close at 10,808.15 led by HP, which lost $6.19 to $98.

Intel plunged late last Friday after the company told investors that revenue will fall short of Wall Street's expectations. Analysts retaliated by issuing a spate of bearish reports.

The news sent the Nasdaq down as much as 214 points in early trading, but it managed to recoup all but 25 points by the end of the day. The Dow Jones industrial was off 144 points but roared into the green to close with an 81-point gain. That momentum, however, failed to sustain the market today.

"You have to be disappointed about the markets not building on Friday's reversal," said Todd Clark, head of listed trading at WR Hambrecht. "The markets started up and should have moved up, but met some supply later in the day."

At the end of regular trading today, Intel fell $2.56 to $45.38. As for other tech giants, Cisco Systems closed down $3.13 at $57.19; Microsoft dropped $2 to $61.25; Dell Computer slipped $1.63 to $34.31; and Oracle slid $1.98 to $78.75.

The markets are "dealing with the whole dynamic of a decelerating economy and decelerating earnings," said Richard Cripps, a market strategist at Legg Mason.

Cripps noted that this is a period when institutional funds sell to balance out portfolios as the fiscal year comes to a close at the end of this month. The dramatic highs and lows of the markets over the past year have rewarded some and burned others, which makes it necessary for institutions to sell stock to offset large losses and gains.

The CNET tech index lost 69 to close at 2,918.14. Losers outnumbered winners, with 70 of the 97 stocks in the index falling, 26 rising and one remaining unchanged.

Of the 18 sectors tracked by CNET Investor, network equipment makers posted the sharpest drops, falling 3 percent. Providers of computer services were the day's largest gainers, climbing 1 percent.

Among members of the CNET tech index, chip stocks posted losses.

Chipmaker Altera lost $6.19, or about 12 percent, to $46.19, and Micron Technology fell $5.75, or nearly 11 percent, to $47.

Altera and Micron also led the Philadelphia semiconductor index down 46.17, or about 5 percent, to 880.36.

Internet stocks also lost ground. Internet incubator CMGI fell $3.19, or nearly 9 percent, to $32.88; e-commerce site Priceline.com slid $1.44 to $20.44; and Internet portal Yahoo slipped $5.94 to $105.50

Fiber-optic equipment maker Ciena gained $6.81 to $127.56. The shares reached as high as $136.25, a new 52-week high that compares with a low of $14.68. The stock has risen 361 percent so far this year.

The company announced that Korea Telecom will buy its gear to boost capacity in seven regional telecommunications networks. The company did not specify the deal's value, but a spokesman said it was worth less than $100 million.

Some newly public companies continued to rise. OmniSky rose $1.94, or nearly 10 percent, to $21.56. The provider of wireless Internet access for personal data assistants went public last Thursday at $12 a share.

Inrange Technologies rose $13.56, or 29 percent, to $59.81. The maker of networking and switching equipment went public on Friday as a spinoff from its parent company, SPX, at $16 a share. SPX rose $9.13 to $144.

Sprint PCS climbed $3.63, or almost 13 percent, to $31.63. A Lehman Brothers analyst raised the wireless phone company to "buy" from "neutral."