MARKET CLOSE: Late selling pounds Dow, Nasdaq

A late selling spree sent technology stocks into a horrendous slide Thursday as the Nasdaq composite plunged 108 points to 2,750.50, the fourth-largest decline in its history. The Dow Jones industrial average tumbled 205 points to end at 10,318.59.

Most of the losses came in the last hour and a half of trading.

The late sell-off in the tech sector was spurned after Microsoft Corp. President Steve Ballmer said valuations on technology stocks have reached ''absurd'' levels, and even his own company's shares may be overvalued.

"There is such an overvaluation of technology stocks, it is absurd," Ballmer said to a group of journalists at a technology conference being given by the Society of American Business Editors and Writers. "I could put our own company and others in that category."

Not surprisingly, Microsoft (MSFT) shares fell 4 7/8 to 91 3/16.

Traders were tormented by some bad technical indicators. The S&P 500 Index fell more than 30 points, dragging it below the psychologically significant 1,300 point threshold. Also, the Dow was supposed to have plenty of support at the 10,500-point level.

It didn't happen.

The Labor Department gave interest-rate junkies more cause for concern, reporting that new claims for unemployment benefits fell last week to their lowest level in 25 years. The number of Americans filing first-time claims for state unemployment benefits was 272,000 for the week ended Sept. 18, their lowest since the 269,000 in the week ended Jan. 5, 1974.

Internet stocks were actually having a good day until the late selling took affect.

Yahoo! Inc. (YHOO) closed off 5 to 174 1/2 while America Online Inc. (AOL) and Amazon.com Inc. (AMZN) fell 3 1/2 and 3 5/8 a share, respectively. Lycos Inc. (LCOS) shaved off 3 1/2 to 43 3/8 and Infoseek Corp. (SEEK) dipped 1/2 to 28 5/16. Excite@Home Corp. (ATHM) lost 2 1/8 to 36 3/16.

CNet Inc. (CNET) managed to buck the trend, closing up 5 7/16 to 48 3/8 after getting an upgrade from Deutsche Banc Alex Brown, who raised its rating to "strong buy" from "market perform."

With Internet service provider competition heating up, Earthlink (ELNK) and Mindspring (MSPG) decided they would have a better chance together than apart. The two companies said they would merge to create an ISP with 3 million members and annual revenue of $650 million. EarthLink shares fell 1 1/8 to 42 3/8 and MindSpring lost 5 1/2 to 27 3/8.

Despite the widespread selling, several Internet initial public offerings made solid gains.

Interactive Intelligence (Nasdaq: ININ) closed up 11 1/16 to 24 1/16. Cybergold (Nasdaq: CGLD) charged up 3 to 12 and Yesmail.com (Nasdaq: YESM) closed up 2 1/16 to 13 1/16. Ashford.com Inc. (ASFD) was a disappointment, closing unchanged at 13.

Intel Corp. (INTC) plunged 5 5/16 to 77 1/2. Advanced Micro Devices Inc. (AMD) shed 1 13/16 to 17 1/8 and International Business Machines Corp. (IBM) lost 3 7/16 to end at 121 3/4.

The PC sector lost more than 4 percent of its value Thursday. Gateway Inc. (GTW) fell 5 ? to 43 5/16 and Apple Computer Inc. (AAPL) lost 7 to 63 5/16. Compaq Computer Corp. (CPQ) and Dell Computer Corp. (DELL) shed 5/8 and 3 1/16 a share, respectively.

Among leading networking stocks, Cisco Systems Inc. (CSCO) dropped 2 7/8 to 69 3/8; Lucent Technologies Inc. (LU) lost 2 1/8 to 65 1/16 and 3Com Corp. (COMS) closed off 2 1/4 to 26 3/8.