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MARKET CLOSE: Economic fears send techs down

Tech stocks plunged Tuesday afternoon after the Federal Reserve indicated that it sees a slowing economy.

The Nasdaq Composite Index slid 112.82 to 2,511.70. The S&P 500 dropped 17.14 to 1,305.60. The Dow Jones Industrial Average retreated 61.05 to 10,584.37.

Fears of a slowing economy intensified after the Federal Reserve said a swift economic cooling could snowball into sharp downturn. The Federal Reserve left short-term interest rates unchanged, but signaled that it stood ready to cut rates if necessary to keep the economy out of a recession.

"It clarifies for people that things are really slowing," said John Leonard, co-head of North American equites at Brinson Partners, which manages $190 billion. "There's a possibility that you'll look back when they revise the (economic) numbers and see that were are already in a recession or at least a hard landing."

Siebel Systems (Nasdaq: SEBL) shed 15 to 63.375 Tuesday after an analyst reiterated a "strong buy" but said the company's growth drivers are shifting.

Moving deeper into one of the hottest networking markets, optical equipment maker Ciena (Nasdaq: CIEN), down 23.1875 to 73.1875, has agreed to buy privately held Cyras Systems in a stock deal valued at about $2.6 billion.

Despite topping estimates for its second quarter, shares of Merix Corp. (Nasdaq: MERX) fell 12.8125 to 12.3125, or over 50 percent after warning for its third quarter.

Progress Software Corp. (Nasdaq: PRGS), down 0.3125 to 14.625, reported fourth quarter revenues and earnings that were down sharply from last year's results. The company blamed the strengthening of the U.S. dollar and an industry slow-down.

SBC Communications Inc. (NYSE: SBC), down 6.6875 to 46.625, said Tuesday that it expects earnings growth in 2001 and fourth quarter earnings per share to be at the lower end of expectations.

Electronics maker Solectron Corp. (NYSE: SLR), up 5.01 to 31.73, saw its shares gain 13 percent Tuesday after beating estimates for its first quarter and receiving favorable reviews from analysts.

Cisco (Nasdaq: CSCO) fell 1.25 to 41.6875, Intel (Nasdaq: INTC) was up 0.1875 to 33.4375, Oracle (Nasdaq: ORCL) rose 1.375 to 30.625 and Microsoft (Nasdaq: MSFT) fell 3.0625 to 44.75.