Techs buckle, slipping into red

The tech-heavy Nasdaq gives in to a dour profit warning and an uninspiring employment report.

2 min read
Technology stocks finally slipped into the red Thursday after struggling against a dour warning from chipmaker Applied Materials and an uninspiring employment report.

The tech-heavy Nasdaq composite index fell 2.62 points to close at 1,900.57, after spending most of the session just marginally in positive territory. The Dow Jones industrial average was up 48.79 points to close at 9,872.39.

In the day's economic news, the Labor Department said new jobless claims fell last week by 8,000 to 444,000; economists polled by Reuters expected claims to rise to 466,000. But the number of people receiving unemployment benefits rose by 18 percent since early September, indicating that the situation for U.S. employment has not improved.

"I don't think you can fundamentally say you have turned the corner. We are still hearing about a lot of job layoffs announced, but the rate at which unemployment is rising is probably slowing down," Stuart Hoffman, an economist for PNC Financial Services, told Reuters.

The semiconductor sector was hurt by news Wednesday after the bell that Applied Materials' fourth-quarter profits fell by 97 percent. Goldman Sachs and Prudential Securities lowered their estimates for the company. Applied Materials shares fell $1.62, or 4 percent, to $39.09.

Intel shares lost 54 cents to $30.78. CNET's Semiconductor Cap index was down more than 1 percent.

In other news, Yahoo shares fell 38 cents to $14.83 after Chief Executive Terry Semel gave details of his turnaround strategy Thursday. He said the Web portal will discontinue its heavy reliance on advertising, cut its staff by 400 people, and slash its divisions from 44 to six.

Trading in shares of Lucent Technologies were also active, down 13 cents to $7.72 after the telecommunications equipment maker said it is likely to sell its fiber-optic business for less than an originally agreed price of $2.75 billion, according to a report in The Wall Street Journal.

Novell shares fell 5 cents to $3.94 after the networking software maker said it would cut 1,400 jobs, or 19 percent of its work force, and take $90 million in charges.

AOL Time Warner shares were off 70 cents to $37.55 as analysts said recently announced restructuring at the company likely means that more layoffs are coming.

Among other actively traded shares, Oracle slipped 13 cents to $14.79; Microsoft rose 17 cents to $66.12, and Cisco Systems was up 25 cents to $20.14.

Amazon.com was down 44 cents at $9.05.

Staff and Reuters contributed to this report.