MARKET CLOSE: Downgrades drive techs lower

Analyst downgrades of widely-held stocks combined with continuing worries about the economy sent the tech sector plunging Wednesday.

The tech-heavy Nasdaq Composite Index fell 178.94 to 2,332.77. The S&P 500 dropped 40.86 to 1,264.74. The Dow Jones Industrial Average slid 265.44 to 10,318.93.

"Confidence is being trimmed back by the combustible combination of a slowing U.S. economy, earnings disappointments and the Fed's inability to lower interest rates immediately," said Alan Ackerman, a market strategist at Fahnestock and Co. "The mood is glum and perplexing."

Shares of Cisco Systems (Nasdaq: CSCO) . fell 5.25 to 36.5, a 52-week low, after Merrill Lynch downgraded the stock on concerns about slowing capital spending.

Yahoo (Nasdaq: YHOO) shares fell 0.0625 to 27.9375, as both CIBC Oppenheimer and U.S. Bancorp Piper Jaffray added to the parade of downgrades for the company.

Networking gear maker Foundry Networks' (Nasdaq: FDRY) shares fell 17.625 to 13 after the company issued a fourth-quarter warning and got slapped with some downgrades. Extreme Networks (Nasdaq: EXTR), down 17.4375 to 31.125, was also downgraded.

The downgrades for leading information technology companies just keep coming. Hewlett-Packard (NYSE: HWP), down 1 to 30.3125, and IBM (NYSE: IBM), down 3.5625 to 86.5625, are the latest victims as Merrill Lynch downgraded both stocks to "neutral."

Jabil Circuit (NYSE: JBL), down 6.75 to 21.0625 as analysts downgraded the company following its disappointing first quarter report and outlook for the second quarter.

Research In Motion (Nasdaq: RIMM), down 5.75 to 75, and Qualcomm (Nasdaq: QCOM), down 6.3125 to 77 1/8, announced a Code Division Multiple Access (CDMA) licensing agreement Wednesday, under which RIM may use Qualcomm's technology and patents to develop, manufacture and sell CDMA products.