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Tech Industry

THE WEEK AHEAD: Investors brace for likely pullback

Some ominous comments from Fed Chairman Alan Greenspan had investors shying away from technology stocks for a change. Short-term interest rates are definitely headed higher, causing even the most ardent bulls to take pause.

For the week, the Dow Jones industrial average fell 209 points to 10,219.52 while the Nasdaq gained 17 to close at 4,412.01. On Thursday, the Nasdaq soared to an all-time high of 4,548.75.

In his Humphrey-Hawkins testimony before Congress Thursday, Greenspan warned that the smoking economy was getting ahead of itself and that the Fed would take steps to slow it down.

"There has been sort of a setback in the stock market over the last month and the idea of a more hawkish Fed has gotten into place," said Pierre Ellis, senior economist at Primark Decision Economics. "Maybe (the more hawkish monetary policy) has already been discounted. Many of the themes here are just repetitions of what he has said in the past. But Greenspan seemed to have notched up the level of concern quite a bit."

Analysts said the worry sparked by Greenspan's comments overpowered encouraging economic data released on Friday that showed inflation remains in check, with consumer prices in January rising less than expected.

"It looks ugly," said Phil Orlando, chief investment officer at Value Line's Asset Management division. "Everyone is still focusing on their hangover from Greenspan's testimony. The economic news was fabulous and you would have thought you would have a rally -- if stocks had focused on the economy and the bond market."

Looking back, Wall Street was pleased with Hewlett-Packard Co.'s (NYSE: HWP) strong first-quarter earnings, pocketing $794 million, or 80 cents a share, on sales of $11.6 billion.

PC and computer-equipment maker said it's on track to post fiscal 2000 sales and earnings growth of around 15 percent.

Ciena Corp. (Nasdaq: CIEN) also posted strong earnings in its first quarter, meeting the consensus estimate of 6 cents a share.

The telecommunications-equipment maker also gained on reports that Juniper Networks Inc. (Nasdaq: JNPR) may be looking to acquire it.

Next week, the earnings onslaught comes to a bit of a halt, but companies such as Lam Research Corp. (Nasdaq: LRCX), Nextel Communications Inc. (Nasdaq: NXTL) and VA Linux (Nasdaq: LNUX).