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Tech Industry

Tech rally loses momentum

Tech trading shifts down a gear as investors react to economic news and hold out for financial updates from Intel and Sun Microsystems.

The tech stock rally shifted down a gear Thursday, as investors reacted to economic news and held out for a financial update from Intel after the bell.

The Dow Jones industrial average was down 15.15 points to 10,099.14, while the Nasdaq composite index rose 7.43 points, or 0.36 percent, to 2,054.27. CNET's technology indexes were mixed.

Wednesday's optimism about technology stocks, along with two better-than-expected economic reports, drove the Dow and the Nasdaq beyond the 10,000 and 2,000 marks, respectively.

But reports Thursday about jobless claims, productivity and factory orders made investors question whether those gains were merited.

The Labor Department said initial jobless claims fell by 18,000 to a seasonally adjusted 475,000 for the week ended Dec. 1. Even though the number of Americans lining up for first-time jobless benefits declined, the four-week moving average, considered a more accurate gauge, rose to 460,750 from 455,000, indicating that the labor market is still weak.

The number of workers remaining on jobless benefits declined, falling by 349,000 to a seasonally adjusted 3.6 million for the week ended Nov. 24.

A revised reading on third-quarter productivity from the Labor Department showed that worker output of goods and services per hour outside the farming sector rose at a 1.5 percent annual rate in July, August and September. Economists expected a rate of 2.1 percent, revised down from the 2.7 percent initially estimated for the quarter.

The Commerce Department said October factory orders posted an unexpectedly sharp gain, the largest rise in almost a year and a half. New factory orders increased 7.1 percent to a seasonally adjusted $333.19 billion.

In technology news, Intel was down 45 cents to $34.16 despite expectations that the chipmaker would guide analysts toward the high end of previous forecasts in its midquarter business update slated for 2:30 p.m. PT.

"We expect Intel to set its revenue target for the fourth quarter toward the high end of its previous target range, between $6.6 billion and $6.8 billion," Merrill Lynch analyst Joseph Osha wrote in a research note Thursday.

Sun Microsystems is also scheduled to report its midquarter financial picture Thursday after the bell. Sun shares were down 42 cents to $14.15. plunged 63 cents, or 20 percent, to $2.47 after news that Chief Financial Officer Joseph Shew is leaving for personal reasons. Shew has been in the CFO post since February.

Among other actively traded shares, Nortel Networks was up 48 cents to $8.99, Oracle was up 53 cents to $15.90. Cisco Systems rose 25 cents to $21.79, and Microsoft rose 55 cents to $68.65.

AOL Time Warner shares fell $1.08 to $34.75 as investors digested the company's management changes; CEO Gerald Levin announced that he will retire. Yahoo rose $1.96 to $19.02, and was up 34 cents to $12.10.

Staff and Reuters contributed to this report.