Led by networking firms, which hit Wall Street with some gloomy, albeit confusing news, tech stocks declined sharply today, one day after the Federal Reserve cut interest rates by a meager .25 percent.
Nortel Networks, formerly Northern Telecom, hit a new 52-week low, falling nearly 3.812 points or 10.63 percent to 33.062. Trading of Nortel was halted yesterday after it dropped 12 percent following an announcement that its revenue growth was slowing. Meanwhile, Lucent Technologies was down 5.25 or a little more than 7 percent at 69.25. Both firms were downgraded today by analysts.
Other networking firms also suffered. Ascend Communications was down more than 6 percent earlier in the day before bouncing back to 45.5, a loss of 1.812 or 3.83 percent. Alcatel, which today was slapped with two lawsuits alleging stock fraud, slipped 1.0625 or 5.88 percent to 17.
Other networking firms, however, suffered only modest declines that were in line with overall losses in the technology sector. Cisco Systems closed at 61.812, down 2.812 or 4.35 percent, and 3Com was off 1.5 or 4.75 percent at 30.06. Overall, the Dow Jones Industrial Average was down 237.9 points or nearly 3 percent at 7842.62, while the technology-laden Nasdaq was at 1693.84, a decline of more than 40 points or 2.32 percent.
Other big losers today were Corel, which was off .218 or 8.54 percent at 2.343; N2K, which was down .812 or 10.16 percent at 7.187; and RealNetworks, which was at 34.687, a decline of 4.687 or 11.9 percent.
The market's slide came 24 hours after the Fed announced that it would cut the interest rates banks charge one another by a quarter percentage point. Investors, who had been hoping for a larger cut, reacted by sending the market south.
The slide seemed to hit the networking companies harder than others in the technology industry, however. Nortel's revenue announcement yesterday came amid new fears by some analysts that growth in demand for networking gear by telecommunications companies may be diminishing more than previously thought. Nortel executives, however, blamed the slowdown on slumping markets in Asia.
One analyst who asked not to be named said she had no reason to revise her growth forecasts for demand of networking equipment, which she predicted would be "in the low to mid teens" for 1999.
Other technology firms that lost ground today included Lycos, which was at 33.812, a decline of 1.437 or just over 4 percent; Inktomi, which was off 4.625 or 5.79 percent at 75.25; and Infoseek, which closed at 24.625, down 1.125 or 4.37 percent.