Fear Of Slowdown Sparks Another Drop In Technology Stocks

Shares of technology stocks fell for the second day in a row on concern that a slowdown in sales during the summer will pull down earnings.

Sales of computers and chips traditionally ease during the summer months as buyers prepare for product introductions in the fall and manufacturers revamp their lines. Some analysts had predicted the industry wouldn’t see its usual summer slowdown this year because demand is so hot across all markets.

“At a point where you are entering a nervous period seasonally, it’s normal to see some profit-taking,” said Krishna Shankar, analyst at Donaldson, Lufkin and Jenrette.

Shankar said it is too early to see evidence of a slowdown. “There will be the normal seasonality, but I don’t think investors should trade these stocks for seasonal weakness,” he said.

The Standard & Poors index of chipmakers was the weakest industry group on the S&P 500 Index, falling 10.05, or 2.9 percent, to 331.60. The chip index has led the S&P 500 in the past 12 months.

Shares of Intel Corp., the world’s largest chipmaker, fell 2 3/8 to 62 5/8. Intel was the most actively traded issue on U.S. composite trading.

International Business Machines Corp. fell 2 7/8 to 95 3/8, Apple Computer Inc. fell 1 3/4 to 46 3/8 and Sun Microsystems Inc. fell 2 3/8 to 47 1/8.

Micron was off 2 1/8 at 54 7/8 and Microsoft Corp. plunged 2 7/8 to 86 7/8.

Some analysts have said the strong demand for personal computers, software and hardware components will continue to blaze through the summer.

Technology stocks have been some of the best-performing stocks and have helped buoy the market as a whole, but sales by some company executives last month and the specter of slowing demand have raised some doubts.