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Blue chips rise as techs retreat

Technology stocks back off as analysts get the jitters ahead of Tuesday's Federal Reserve meeting.

Technology stocks lost ground Monday as analysts got the jitters ahead of Tuesday's Federal Reserve meeting.

The Nasdaq fell 26 points to 2,081.90, and the Dow Jones industrial average gained 56 to finish at 10,877.53.

U.S. business inventories fell for the second month, a positive sign for the economy, which has been hampered by an inventory overhang.

The Commerce Department said Monday that business inventories declined 0.3 percent to $1.21 trillion in March after a 0.4 percent drop in February. It was the first back-to-back monthly decline in inventories since January and February 1992.

That report will be closely analyzed in anticipation of Tuesday's meeting of the Federal Reserve's Open Market Committee, which considers monetary policy. Most analysts are expecting the Fed to cut interest rates by 50 basis points.

Semiconductor sales in the Asia-Pacific region--excluding Japan--are expected to drop almost 10 percent to $51.4 billion this year, according to researcher Dataquest. The research firm said the decline is in line with the economic slowdown in the United States. Global sales are expected to drop 16.7 percent to $188 billion this year, from a record of $226 billion a year ago.

Hewlett-Packard announced a partnership with OfficeMax, replacing Gateway as the exclusive maker of PCs sold through the retail chain. Gateway said last month that it was cutting back on its retail initiatives, including a deal that involved opening up Gateway Country branches in 1,000 OfficeMax stores. HP shares fell 29 cents to $25.90, and Gateway rose 22 cents to close at $17.75.

A Thomas Weisel Partners analyst cut estimates on Intel, saying he believed the chip giant would run into problems with its Pentium 4 chips. The stock dipped 53 cents to close at $27.41.

British telecommunications company Cable & Wireless snapped up hosting firm Digital Island in a deal worth $340 million. C&W plans to merge the two companies' global networks to create a larger, more comprehensive Internet Protocol backbone for business clients. Digital Island picked up 26 cents to $3.39.

Financial services firms are scrambling to meet a deadline to put in place policies and procedures designed to assure the privacy and security of consumer-related data. The Gramm-Leach-Bliley Financial Services Modernization Act affects any business entity, from banks to credit card companies, that uses personal information about consumers' finances.

Dell Computer and Electronic Data Systems have formed a consulting alliance that the companies say will net $500 million in sales over the next five years. Dell lopped off 29 cents to $24.19, and EDS lost 53 cents to $61.35. dropped $1.35 to $13.33, AOL Time Warner slid 4 cents to $51.60, and Yahoo clipped 69 cents to finish at $17.10.

Among leading volume movers, Cisco Systems dropped 48 cents to $18.57, Microsoft trimmed 68 cents to $68.72, Nortel Networks fell 88 cents to $13.75, EMC shed $1.03 to $38.92, and Oracle moved up 14 cents to close at $17.75.

Staff and Reuters contributed to this report.