Technology stocks suffered through a brutal day of selling Tuesday as the Nasdaq composite plunged 179 points to finish at 2,291.86. The Dow Jones industrial average lopped off 141 points to close at 10,646.15.
Robertson Stephens analyst Dane Lewis didn’t help matters much when he cut a dozen data storage and Internet security stocks on concerns of slowing demand and diminishing average selling prices.
“The focus today seems to be on downgrades, and until we get a better catalyst, that's probably how it's going to continue to be,” said Art Hogan, chief market analyst at Jefferies & Co. “Right now, most of the news is negative.”
An industry report Tuesday from the National Association of Purchasing Management showing manufacturing activity in December was at its lowest level in nearly a decade added to the sense that the economy is weakening.
Network-equipment stocks were hit hard as Cisco Systems (CSCO) fell $4.94 to a 52-week low of $33.31. Brocade (BRCD) dropped $16.31 to $75.50 and Redback Networks (RBAK) closed off $6.94 to a 52-week low of $34.06.
CacheFlow (CFLO) and Quest Software (QSFT) dropped $3 and $4.38 a share, respectively, following the Robertson Stephens downgrades. Veritas (VRTS) lost $21.50 to $66 while Network Appliance (NTAP) and Inktomi (INKT) fell $12.75 and $3.31 a share, respectively.
Extreme Networks (EXTR) plunged $11.50 to $27.63 after it said it will buy privately held Optranet, a developer of broadband IP services for about 2 million of its shares in a move to extend its "ethernet everywhere" strategy.
Pegasystems (Nasdaq: PEGA) closed up 44 cents to $2.75 after it said its fourth quarter revenue will fall 40 percent sequentially, and it will lay off workers to improve profitability.
Yahoo! (YHOO) lost $1.88 to $28.19. America Online (AOL) tumbled $2.41 to a 52-week low of $32.39 while Amazon.com (AMZN) and eBay (EBAY) finished off $1.69 and $2.81 a share, respectively.
Among widely held PC stocks, Dell (DELL) inched up 6 cents to $17.50; Gateway (GTW) lost 74 cents to $17.25; Apple Computer (AAPL) closed unchanged at $14.88 and Compaq (CPQ) closed down 24 cents to $14.81.
Intel (INTC) rose $1 to $31.06. Advanced Micro Devices (AMD) picked up 56 cents to $14.38 and IBM (IBM) chipped off 19 cents to $84.81.
Adaptive Broadband Corp. (Nasdaq: ADAP) shed $2.94 to $3.19 after it lowered guidance for its second quarter.
Microsoft (MSFT) was unchanged at $43.38 while Oracle (ORCL) and Sun Microsystems (SUNW) closed off $2.69 and $2.44 a share, respectively.