Nasdaq falls below critical 2,000 mark

Faith in Oracle fades in the afternoon, leaving the Nasdaq below the psychologically critical 2,000 mark as concern about profit warnings hold sway.

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Faith in Oracle faded Monday afternoon, leaving the Nasdaq below the psychologically critical 2,000 mark as concern about profit warnings held sway.

The Nasdaq composite index slid 39.80 points, or nearly 2 percent, to 1,988.63, and the Dow Jones industrial average rose 21.74 to 10,645.38.

Oracle slipped 16 cents to $14.84, falling from earlier gains of as much as 30 cents. The stock had a volatile day as investors were anxious ahead of the company's fourth-quarter report, released after the bell.

JDS Uniphase added to last week's losses following its Friday profit warning, falling $1.84, or 15 percent, to $10.60 as the Nasdaq's most actively traded decliner.

A warning from Level 3 Communications helped sour investors on technology stocks. The company announced layoffs and warned that revenue will be lower for the fiscal year as it struggles to survive in the economic downturn. Level 3's management has agreed to halt selling company shares. The stock fell $1.65, or 22 percent, to $5.97.

More bad news came from a Robertson Stephens report showing telecommunications carriers are expected to continue making cut-backs in spending over the next few years. After rocketing growth, telecom carriers have trimmed spending sharply over the past few months, and equipment companies such as Lucent Technologies, down 62 cents to $5.69, Cisco Systems, off 15 cents to $16.50, and Nortel Networks, down $1.34 to $8.52, may have only just begun to suffer, analyst Paul Johnson said.

Telecom-equipment stocks were off 7.56 percent according to CNET's index.

OSI Systems said Monday it is exploring "strategic alternatives" for its fiber-optic product subsidiary, OSI Fibercomm. The moves by the company, whose stock was unchanged at $3.92, could include a sale of the division.

PurchasePro said it would cut its staff by 50 percent and realign senior management in a bid to get the troubled business-to-business software provider back on its feet. Shares were off 17 cents to $1.35.

Among other technology bellwethers, Microsoft fell $1.14 to $66.88, and Intel dropped 13 cents to $27.55.

Amazon.com shed 66 cents to $11.83, AOL Time Warner dropped $1.10 to $49.80, and Yahoo was down 70 cents to $15.31.

CNET Investor staff and Reuters contributed to this report.