Technology stocks rose yesterday after US growth data showed the economy shrank less than Wall Street had expected in the third quarter, soothing investors' worries about recession.

An upbeat outlook from network computer maker Sun Microsystems also boosted Wall Street's mood. But blue chips were dragged lower after Moody's Investors Service cut its debt rating on Eastman Kodak, citing falling profits at the photography giant.

The economy suffered its worst contraction in more than a decade, with GDP showing a drop of 0.4 per cent, according to initial government estimates. The number still managed to beat economists' projected 1 per cent drop and helped spark an early rally.

Another somewhat upbeat economic report from the National Association of Purchasing Management - Chicago said its October index slipped to 46.2 from 46.6 in September, but beat economists' estimates of a drop to 43.0. "You have two economic numbers that didn't show the weakness that was expected," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.