US stocks: Bargain-hunting boosts tech stocks

NEW YORK - Technology stocks rose after three days of selling, but blue chips ended down slightly on worries sparked by reports of economic sluggishness.

The lure of cheap shares tempted some investors, who raced to snap up companies like technology leader Yahoo after seven straight sessions of decline in the stock.

The Nasdaq Composite rose 21.38 points, or 1.63 per cent, to 1335.76, as investors snatched up big tech issues such as Cisco Systems, up 48USc to US$14.20, and Microsoft, up US$1.20, or 2 per cent, at US$50.58.

The blue chip Dow Jones industrial average fell 23.1 points, or 0.27 per cent, to 8670.99 after weaving in and out of positive territory much of the day. The broad Standard & Poor's 500 index slipped 0.07 points, or 0.01 per cent, to 917.80.

Traders blamed the market's whipsaw action on modest trading volumes as more and more investors headed out to the beaches, leaving trading floors skeletally staffed before Monday's Labour Day holiday.

Dragging on the Dow was a 3 per cent drop in General Electric, which fell 95USc to US$30.35 and was the most active issue on the New York Stock Exchange.

Yahoo helped boost the Nasdaq with a gain of 12 per cent to US$10.25 after Merrill Lynch raised its rating on the internet giant.

The American Stock Exchange's internet index rose 3 per cent, reflecting gains in stocks such as AOL Time Warner, up 76 cents, or 6 per cent, to US$13.06.

Tech downgrades included marquee names such as Novellus, the semiconductor equipment maker, and Micron Technology a key chip manufacturer.

Micron was down 58 cents at US$17.25, or more than 3 per cent.

Novellus, one of several companies in the semiconductor equipment sector downgraded by UBS Warburg, finished the session up 11 cents at US$24.29.

Other pockets of weakness plagued the market. Grocery store operator Kroger slumped US$1.16, or 6 per cent, to US$18.34 and shoe retailers Footstar and Finish Line slashed their earnings expectations for the current quarter and sent shares of most footwear stocks south.

Footstar fell US$2.10, or 15.5 per cent, to US$11.45, and Finish Line dropped US$1.61, or 15 per cent, to US$8.88. Reebok International fell $3.07, or 11 per cent, to US$24.63, and Nike fell US$1.55, or 3 per cent, to $42.98.