EMC, Sun drag Nasdaq down 3 percent
A Goldman Sachs analyst says the companies are unlikely to meet growth targets, and the Nasdaq responds by dropping more than 75 to close the day.
The Nasdaq shed 75.49, or 3.35 percent, to 2,175.54. The Dow Jones industrial average was up 33.77 to 11,039.14.
Goldman Sachs analyst Laura Conigliaro lowered estimates for server maker Sun Microsystems and data-storage maker EMC, souring investors on the companies. Sun shares fell $1.80, or 9 percent, to $18.76. EMC shed $3.09, or 8 percent, to $34.01.
The analyst based her lowered numbers on the fact that the U.S. economy is not improving and the economic picture in Europe and Asia is looking dour.
Other analysts also expressed pessimism for the economy Tuesday.
"The market's spring recovery trend has become more choppy or labored in recent weeks, and another pullback may develop in coming weeks," Merrill Lynch analyst Richard T. McCabe wrote.
The news sent other technology bellwethers into a tailspin. Cisco Systems fell $1.59 to $20.46, Intel slipped $1.25 to $27.85, and Oracle fell 90 cents to $ $15.61. Microsoft lost 57 cents to $70.34.
Separately, EMC said it will cut 1,100 jobs, or 4 percent of its global work force, as it tries to reach 2001 revenue growth targets of 20 percent or more, grow market share and cut expenses. However, the company also plans to beef up its sales force.
France's Alcatel, down 70 cents to $27.41, and Lucent Technologies, down $1.08 to $8.32, were locked in tense talks to hammer out final details and unveil an approximately $23 billion merger, but differences may cause the negotiations to collapse.
Shares of Akamai Technologies were up 18 cents to $11.13 after the company announced it had won government contracts to supply Web infrastructure services.
In economic news, consumer confidence and personal income figures were both on investors' minds.
Consumer confidence has gone up, according to the Conference Board's broad index of consumer attitudes, released Tuesday. The index jumped to 115.5 in May, up from an upwardly revised 109.9 in April and compared with a four-and-a-half year low of 109.2 hit in February. Economists polled by Reuters had forecast a 111.2 reading.
The Commerce Department also reported that personal income grew at a seasonally adjusted 0.3 percent annual rate in April, down from the 0.5 percent pace seen in March. But spending on goods and services grew at a faster 0.4 percent pace in the month, up from March's 0.2 percent rate.
Amazon.com was up 13 cents to $17.22, AOL Time Warner lost $2.53 to $51, and Yahoo shed $2.13 to $18.79.
Staff and Reuters contributed to this report.