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Techs tumble from three-month high

Technology stocks lose their recent gains despite encouraging words from Goldman Sachs strategist Abby Joseph Cohen.

Technology stocks fell from their recent highs Tuesday despite encouraging words from Goldman Sachs strategist Abby Joseph Cohen.

The Nasdaq composite index lost 53.91 points to 1,880.51, and the Dow Jones industrial average dropped 75.08 points to 9,901.38.

On Monday, both indexes gained, taking the Nasdaq and the Dow to their highest closing levels since mid-August.

The Organization for Economic Cooperation and Development announced Tuesday that the U.S. economy was tipped into recession by the Sept. 11 attacks. It said growth should pick up starting in mid-2002, although not before an extra 2 million workers lose their jobs.

Another report showed that the U.S. trade deficit shrank more in September than any other month on record. The Commerce Department reported Tuesday that imports and exports of a broad range of goods and services fell, bringing the trade gap down by $8.4 billion to $18.7 billion from $27.1 billion in August. That's the biggest monthly decline since January 1992, when the government started keeping track.

U.S. exports were around $77.3 billion, and imports fell to $96 billion. The deepest declines were in international travel, passenger fares and other services.

The Conference Board's index of leading indicators, a compendium of previously announced numbers that includes statistics such as jobless claims and building permits, showed some strength in the economy. The index rose 0.3 percent to 109.4 in October. The gain is an improvement over a 0.5 percent decline in September and a 0.1 percent drop in August. Economists had expected the index to remain flat.

Despite negative economic news, stock prices have soared around 20 percent, something which is merited and bound to continue, according to a research note Tuesday from Cohen. The Goldman Sachs analyst is known for her bullish calls, repeatedly predicting stocks would continue to rise in the 1990s.

"Our year-end 2002 price targets suggest additional double-digit gains," Cohen said.

In the technology sector, Microsoft may soon settle dozens of private antitrust cases filed against it. The software giant, which recently reached an antitrust settlement with the U.S. Justice Department, may be set to resolve the private lawsuits that accuse it of using monopoly power to overcharge for its software. Shares were off $1.14 to $65.40.

Loudcloud jumped 21 cents, or 7 percent, to $3.36 after announcing that its third-quarter net loss was smaller than it was a year ago. Management also said full-year revenue should be at the high end of previous estimates.

A technology initial public offering was making its way to market; chip software company Magma Design Automation priced 4.85 million shares at $13 each, above its range of $9 to $11 a share. The stock opened at $18.25 and closed even higher, up 47 percent to $19.21.

Among other actively traded shares, Intel fell $1.04 to $29.95, and Oracle fell 31 cents to $14.56.

AOL Time Warner fell 78 cents to $ 36.97. Yahoo fell $1.39 to $14.89, and was off 59 cents to $8.60.

Staff and Reuters contributed to this report.