Tech Stocks Hit Hard Amid Sudden Doubt

NEW YORK: Tech-stock fever may have just broken. The NASDAQ suffered its third biggest point decline ever Tuesday, closing down 94 points after a late-aternoon selling frenzy. Money magazine writer Pablo Galarza says the index could be in for a depressing spring. "All the earnings reports for these stocks are in already, and there won't be any more for a while. The sector feeds on catalysts, on constant encouragement, and traders are selling now and waiting for a slow drift downward before they spike again."

Will they? One piece of news that was supposed to goose the sector -- Net portal Lycos's stock-swap merger with USA Networks, announced this morning -- may have had a dampening effect instead. Lycos dropped 33 points on the news, partly because they didn't get enough out of the deal, and partly because for the e-commerce faithful, buying a TV network has the ring of heresy. "This casts a bit of a shadow on the business models of all the other Net portals," says Galarza. "Will they now need to leave the Internet to be successful in the long run? Doubts like that can have a sector-wide effect." It just did; brethren Yahoo, Excite and Amazon.com all dropped Tuesday, and as for the future -- well, no class of stocks has a longer way to fall.