Losers thumped winners by a large margin as 76 of the index's 100 stocks fell, 22 gained and two were unchanged.
Of the 18 sectors tracked, networking stocks were the day's largest losers, dropping 5 percent. Three areas--PC software, computer aided design/manufacturing and server hardware--each dipped 3 percent.
On the plus side, the personal computer hardware sector rose almost two percent.
In the broader markets, the Nasdaq composite index lost 141.38 to 4,907.24, and the Standard & Poor's 500 index fell 11.45 to 1,383.62. The Dow Jones industrial average edged up 18.31 to close at 9,947.13.
Intel closed up $1.94 at $122.13; Microsoft edged down $3 to $98. The software giant announced a partnership with Andersen Consulting to promote and sell Windows 2000 software to corporations.
StarMedia Network, an Internet media company, was the biggest percentage loser on the Nasdaq. The shares fell $16.94, or 34 percent, to $33.06. Volume topped 7.2 million shares. Merrill Lynch and Salmon Smith Barney downgraded the stock of the company, which focuses on the Latin American market.
Among members of the CNET tech index, DoubleClick and KLA-Tencor posted significant losses.
DoubleClick fell $10.75 to $106.88. Shares of KLA-Tencor slipped $7.19 to $83.94, reflecting general weakness among chip-equipment makers. Some analysts saw the slump as a pullback from the sector's recent run-up.
The weakness in the area pushed the Philadelphia semiconductor index down 16.63 to 1,316.10. In addition to KLA-Tencor, Linear Technology fell $7.06 to $94.50
Also in the CNET tech index, shares of eBay and Micron Electronics posted strong gains. eBay rose $16.50 to $209.75, extending its rise from last week when it announced it will enter the used car business.
Micron climbed $11.75 to $118.13 on investor optimism that rising demand will push up prices for its products.
Shares of Qwest Communications International and US West fell as the companies inched closer to their merger. Qwest fell $1.50 to $50.75, and US West dipped $5.38 to $65.