Investors cashed in some recent profits in the technology sector Tuesday, sending the Nasdaq composite down 65 points to 3,756.34. The Dow Jones industrial average closed off 80 points to 10,735.57.
Despite the pullback, analysts said it simply represents a deep breath before investors start buying technology leaders later this summer, especially if interest rates remain unchanged.
Revised U.S. productivity data for the first quarter showed workers churned out goods and services at a more efficient rate, keeping labor costs restrained and helping mute inflation pressures, according to the Commerce Department.
"It's something temporary," said Trude Latimer, an independent market strategist in Charlottesville, VA. "I think that the psychology of the market has improved enough that it can take a couple of days of profit-taking without going back to the very negative psychology we had until last week."
Internet stocks closed mostly lower Tuesday as Yahoo! (YHOO) closed off 2 1/4 to 135 1/16. America Online (AOL) moved up 5/8 to 55 5/8 while Amazon.com (AMZN) and eBay (EBAY) closed off 3 15/16 and 3 5/8 a share, respectively.
Lycos (LOCS) fell 3 5/8 to 65 3/4. JDS Uniphase (JDSU) shed 2 1/6 to 107 and Ciena (CIEN) moved up 4 1/4 to 137 7/8. SDL Inc. (SDLI) moved up 3 to 255 and Scient (SCNT) closed up 1 1/4 to 56 5/8.
drkoop.com (Nasdaq: KOOP) moved up 15/16 to 2 23/32 after a dose of financial care from webofcare.com incited investors to buy shares in the bottomed-out stock.
Sycamore Networks (Nasdaq: SCMR) fell 15/16 to 102 after it said the acquisition of Sirocco will beef up its product and services portfolio.
Cisco Systems (CSCO) dropped 1 15/16 to 61 5/16. Nortel Networks (NT) shaved off 1 3/16 to 58 3/4 and 3Com (COMS) clipped 3/4 to 46 9/16.
Lucent (NYSE: LU) slipped 1 1/2 to 62 1/2 after it announced a deal with Metromedia Fiber (Nasdaq: MFNX), down 1 1/2 to 36 1/2, as well as China Unicom and Fujitsu, aimed at the build-out of its fiber-optic networks in America and Asia.
Electronics For Imaging Inc. (Nasdaq: EFII) plunged 10 13/16, or 31 percent, to 23 15/16 after it warned that its second-quarter sales and earnings will fall well short of analysts' estimates.
Intel (INTC) lost 3 to 129 9/16 while Advanced Micro Devices (AMD) and IBM (IBM) each fell 7/16 a share.
Among widely held PC stocks, Dell Computer (DELL) gained 1 7/8 to 44 5/8; Gateway (GTW) picked up 15/16 to 52 13/16; Apple Computer (AAPL) moved up 1 9/16 to 92 7/8 and Compaq (CPQ) finished up 5/16 to 27 3/16.
Microsoft (MSFT) jumped 2 3/4 to 69 5/8 while Oracle (ORCL) and Sun Microsystems (SUNW) closed off 3 7/8 and 4 5/16 a share, respectively.>