Intel led the losers as the US Nasdaq index shed almost 6 per cent in late trading yesterday. The catalyst for the sell-off was a report from semiconductor equipment makers of a fall-off in orders. The underlying problem remains a fear about technology stock valuations and the prospects for interest rates.
The monthly figures for orders per $100 of products shipped were enough to send the Nasdaq to its lowest level since November 10th last year and a full 38 per cent off the highs it set in March.
Analysts said investors appeared to be looking for any excuse to sell technology stocks.
The Nasdaq lost 199.92, or 5.94 per cent, to close at 3,164.29. The Dow also suffered at the hands of the flight from technology, shedding 120.28, or 1.14 per cent, to 10,422.27.
Intel was hardest hit by the report on orders, losing $8.50 to $109.871/2 . Cisco Systems, one of the world's largest companies, which provides the backbone for the Internet, gave up $4.70 to $50.55.
"No one wants to commit to technology because every time they do, they are getting their fingers blown off," said Mr Guy Truicko, portfolio manager at Unity Management in Garden City, New York. "Until we get some kind of feeling that Fed Chairman Mr Alan Greenspan is done raising rates, there is not much of a catalyst to drive us north right now."
Interest rates increases can squeeze profits by reducing growth in consumer demand and by making it more expensive for companies to borrow money.
