The Nasdaq fell 120.59, or almost 5 percent, to 2,349.33, and the Standard & Poor's 500 index dropped 18.20 to 1,302.08. The Dow Jones industrial average declined 64.25 to 10,722.60.
Makers of optical equipment posted some large losses. Ciena dropped $10.31, or about 13 percent, to $70.94 at midday, while Juniper Networks was down $13.81, or nearly 11 percent, to $112.25.
Other large-cap stocks dragged the tech sector lower. Cisco Systems fell $3.06, or about 8 percent, to $35.19; Oracle dropped $1.44, or 5 percent, to $27.63; and Sun Microsystems stumbled $1.31, or about 5 percent, to $26.56.
On the up side, Intel rose 81 cents to $30.88 at midday, along with Microsoft, which gained 38 cents to $43.75.
The CNET tech index fell 32.66 to 1,951.74. Losers roughed up winners, with 57 of the 97 stocks in the index falling, 37 rising and three remaining unchanged.
Computer data storage companies also lost ground. Of the 18 sectors tracked by CNET Investor, computer data storage companies were the day's largest losers, falling about 13 percent. Wireless companies posted the biggest gains, rising about 1 percent.
EMC fell $9, or about 14 percent, to $57.50. The data storage maker was downgraded to "long-term attractive" from "buy" by analyst Dane Lewis at Robertson Stephens, who said in a research note that corporate spending for technology will slow more than expected in the first quarter of 2001.
Other storage stocks took a hit. Brocade Communications Systems fell $13.75, or nearly 15 percent, to $78.06, and Network Appliance declined $12.31, or 19 percent, to $51.88. Storage software maker Veritas Software fell $12.50, or 14 percent, to $75.