Stocks fell after Lucent Technologies said the Securities and Exchange Commission is probing its accounting practices and analysts said Dell Computer may lay off thousands of workers.
"Things are tough," said Uri Landesman, chief investment officer for AFA Management Partners LP. "In the same week, Cisco misses earnings for the first quarter in a long time and Dell is cutting people for the first time in its history."
At 1 p.m., the Dow Jones industrial average was off 65.23 at 10,815.32. The weakness in technology stocks also pushed the Nasdaq composite index down 71.86 to 2,490.20, while the Standard & Poor's 500 index dropped 11.48 to 1,321.05.
Lucent dropped $1.55 to $15.34. Lucent spokesman Bill Price said the company "has continued to have a dialogue" with the SEC since it contacted regulators last year after sales were recorded improperly.
The SEC is investigating whether the biggest maker of phone equipment improperly booked $679 million in revenue in the fiscal year ended Sept. 30, 2000, the Wall Street Journal reported, citing unidentified people familiar with the situation.
Dell fell $1.50 to $24.56. The No. 1 U.S. personal-computer maker may soon fire about 3,000 staff, the first major job cuts in its history, as it slashes expenses in the face of slumping demand, analysts said.
"It just seems like there hasn't been any good news for a while in technology, and these are the latest examples," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "The earnings news and the announcements we've heard in this sector have been overwhelmingly negative.
"There really isn't a reason for these stocks to move higher right now."
Lowe's Cos., the No. 2 home-improvement retailer, rose $3.61 to $53.61. Goldman, Sachs & Co. analyst Matthew Fassler raised the stock to "recommend list" from "market outperform," saying Lowe's prospects look brighter for the second half.
Rambus advanced $2.69 to $45 after Toshiba Corp. said it plans to boost production of semiconductors based on the computer memory-chip designer's technology. Toshiba, the world's No. 2 chipmaker, plans to triple production of high-speed memory chips based on technology from Rambus.
ImmunoGen declined $1.81 to $21.31. The pharmaceutical company said it lost 7 cents a share in its fiscal second quarter. It was expected to break even.
SPSS fell $2.06 to $19.88. The maker of statistical-analysis software said it earned 58 cents to 63 cents a share in the fourth quarter, missing analysts' forecast of 72 cents.
Mohawk Industries fell $3.50 to $27.25. The maker of carpets and rugs said it expects first-quarter earnings to be 15 percent to 20 percent less than the year-earlier quarter's 61 cents a share.
Zebra Technologies tumbled $12.25 to $39.63. The maker of bar-code scanners said it earned 57 cents a share in the fourth-quarter, 23 cents less than analysts forecast.
Pixar rose $1.81 to $35. The movie company said it earned 71 cents a share in the fourth-quarter, 8 cents more than analysts expected.
Power-One plunged $7.44 to $24.75. The designer and maker of power supplies for electronic equipment reduced second-quarter earnings estimates because of a larger-than-expected inventory build-up at Cisco Systems, one of its biggest customers.
Bear Stearns fell $2.01 to $57.71. Salomon Smith Barney analyst Guy Moszkowski cut the brokerage to "outperform" from "buy," saying the shares, which have climbed 45 percent in the past year, are unlikely to rise further. The firm "has generally lost share of key investment banking business," Moszkowski said in a note to clients.