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MARKET CLOSE: Blue chips rally; techs falter

Technology stocks made a spirited rally in late trading Monday but still finished in the red as the Nasdaq composite shed 17 points to finish at 2,643.21.

Blue-chip stocks posted strong gains, pushing the Dow Jones industrial average up 102 points to 10,965.85.

In the past month, investors have come back to the tech sector despite disappointing earnings and watered down guidance for at least the first half of fiscal 2001. A pair of half-point cuts in short-term interest rates didn’t hurt either.

“(The Nasdaq) had a pretty good run in January, and investors are taking some chips off the table,” said Guy Truicko, equity portfolio manager at Unity Management. “They're not sure whether the Fed's going to ease again and the fundamentals really haven't improved in technology.”

Memory chipmakers lost ground Monday on reports that worldwide semiconductor sales will improve only 17 percent this year, according to the Semiconductor Industry Association, down from original estimates of 22 percent growth.

Micron Technology (MU) fell $2.92 to $38.28 while Rambus (RMBS) shed $3.56 to finish at $45.50.

Intel (INTC) lost 94 cents to close at $34.69 while Advanced Micro Devices (AMD) and IBM (IBM) gained 10 cents and $2.04 a share, respectively.

Cisco Systems (CSCO), which reports earnings Tuesday, fell another 94 cents to $34.56. Nortel Networks (NT) clipped 25 cents to $35.76 and Lucent Technologies (LU) added 9 cents to $17.82.

PurchasePro (Nasdaq: PPRO) slumped $3.63 to $21.50 despite its rebuttal to an article published in Barron's, which questioned the company's business model and valuation. Other B2B stocks met mixed results as i2 Technologies (ITWO) gained $2.06 to $49.56 while Ariba (ARBA) and Commerce One (CMRC) trimmed $1.31 and 6 cents a share, respectively.

Among widely held Internet stocks, Yahoo (YHOO) rose $2.06 to $35.06; America Online-Time Warner (AOL) gained $1.58 to $49.37; (AMZN) inched up 6 cents to $14.44; eBay (EBAY) tacked on 44 cents to $46.69 and CMGI (CMGI) closed off 13 cents to $5.88.

Princeton Video Image (Nasdaq: PVII) picked up 59 cents to $5.34 after the company inked a $17.5 million licensing deal with Cablevision (NYSE: CVC), up 62 cents to $83.82.

Exodus Communications (Nasdaq: EXDS) dropped $4.44 to $18.75 after it said it will sell 13 million shares in a secondary offering and raise $500 million in a convertible bond offering. The deals will raise a total of $800 million--enough to fund the company until it delivers net income in 2003.

Harmonic (Nasdaq: HLIT) closed off 56 cents to $9.69 after it said it would cut 10 percent of its workforce, a cost-cutting move intended to address lower spending by some of the company's major customers.

Microsoft (MSFT) added $1.13 to $61.94. Oracle (ORCL) sawed off 25 cents to $27.50 and Sun Microsystems (SUNW) closed off $1.31 to $27.88.