Trouble in the telecom equipment sector along with bad news for Intel and a worse-than-expected jobs report had technology stocks in the red at midday. The Nasdaq slipped 42.23 to 1,742.77, and the Dow Jones industrial average fell 115.11 to 9,802.94.
The Inter@ctive Week @Net Index fell 7 to 148.67.
The U.S. unemployment rate climbed in March to its highest level since mid-1999 as payrolls logged their sharpest fall in nearly a decade, the government said on Friday in a report. The news stoked speculation that the Federal Reserve could cut interest rates before its next meeting.
"I don't know whether it will be in the next couple of days, but this adds to and brings more force to the argument for an intermeeting rate cut," Carol Stone, deputy chief economist of Nomura Securities International in New York, told Reuters.
The European Commission confirmed on Friday that it was investigating the business practices of U.S. computer chip giant Intel (Nasdaq: INTC). The company's shares were down 88 cents to $24.75.
Telecom equipment makers Sycamore (Nasdaq: SCMR), down $1.88 to $7.19, and Extreme (Nasdaq: EXTR), down $1.83 to $14.18, both fell after warning that their third quarters wouldn't live up to the Street's expectations.
Tellabs (Nasdaq: TLAB), off $7.50 to $33.25, slashed its first-quarter targets for the second time, adding yet another warning to the long list from telecom equipment makers.
Network services provider Illuminet Holdings (Nasdaq: ILUM), up $2.12 to $20.63, raised its first-quarter earnings forecast, saying it believes its business model is solid enough to weather the economic slowdown hurting the telecommunications sector.
Amazon (Nasdaq: AMZN) was off 65 cents to $8.47, AOL Time Warner (NYSE: AOL) lost $1.56 to $38.14 and Yahoo (Nasdaq: YHOO) lost 56 cents to $14.69.
Cisco Systems (Nasdaq: CSCO) fell $1 to $13.94, Intel (Nasdaq: INTC) fell $1.12 to $24.50, Oracle (Nasdaq: ORCL) shed 90 cents to $13.84 and Microsoft (Nasdaq: MSFT) was down 69 cents to 56.06.
ZDII staff and Reuters contributed to this roundup.