(Updated from 4:30 p.m. EST)

Yahoo!

(YHOO)

Schmahoo!

Investors slammed Yahoo! yesterday after its lackluster

after-hours earnings report, which prompted a

string of downgrades and estimate reductions this morning. The stock closed down 15.2% to $25.88. But technology stocks in general had a stellar day; strong internals dominated the session once again.

Just minutes after the close,

Hewlett-Packard

(HWP)

warned that it also will have an earnings shortfall -- it now expects 30 cents to 40 cents a share, compared to the 42 cents predicted by

First Call/Thomson Financial

. In November, H-P had said it was comfortable with analysts' estimates, which then called for 44 cents a share.

The

Nasdaq Composite Index surged to triple-digit gains in the afternoon. The

Dow Jones Industrial Average, which opened in the green, had a volatile day. It poked its head back into positive territory after spending many hours shuffling through negative numbers. And

TheStreet.com Internet Sector

index, the DOT, bounced 4.8% despite the news from component Yahoo!

Sure, the analysts lined up to bad-mouth Yahoo! this morning, but they also were on the prowl for such big-cap tech stocks as

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

and

Intel

(INTC) - Get Intel Corporation (INTC) Report

.

Cisco was hit with cuts on its 2001 and 2002 earnings estimates by

Credit Suisse First Boston

because of some cautious words by Cisco's CEO John Chambers at an investor conference yesterday. The stock had a bad morning but closed up 7.9% to $39.13.

Salomon Smith Barney

lowered estimates on Intel's first-quarter and full-year 2001 EPS views, due to slowing sales.

Merrill Lynch

tag-teamed it with concerns about four other chipmakers' 2001 earnings views. Intel closed up 1.1% to $33.38.

Investors paid little heed today to

Lehman Brothers

analyst

Dan Niles, who suggested that investors sell all their semi stocks on a rally. The

Philadelphia Stock Exchange Semiconductor Index

closed up 5.8%.

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Sector Watch

The

TheStreet Recommends

Philadelphia Stock Exchange Computer Box Maker Index

closed up 5.6%. Nearly all components helped it out. Components

Unisys

(UIS) - Get Unisys Corporation Report

, which closed up 14.4%, and

Dell

(DELL) - Get Dell Technologies Inc Class C Report

, up 7%, popped after announcing their partnering with

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

-- up 4% -- to create a new voting technology. The project is supposed to integrate election processes from voter registration to counting results, and ensure that last year's problems -- a la Florida -- won't happen again.

The

American Stock Exchange Oil & Gas Index

closed up 1.5%. Oil's rising prices were also responsible for giving some lift to the European markets.

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Bonds/Economy

Treasuries started the day trading higher but lately slipped.

After giving way this week to large quantities of corporate and federal agency debt, government bonds again responded to the equity market and slumped as the session wore on. Stocks, which stood their ground for the last few trading sessions, were vulnerable once again as technology bellwethers sent out new alerts on poor corporate returns. But as the session went on, the Nasdaq stiffened its back to some of the bad news, and Treasuries moved in the opposite direction.

The latest unemployment data came out better than what the worsening economy would imply. It remains subject to adjustment, and traders are keener about December's retail report due tomorrow.

The benchmark 10-year

Treasury note lately lately was down 5/32 to 104 23/32, its yield rising to 5.123%.

In economic news,

initial jobless claims

(

definition |

chart |

source

), which tally those filing for state unemployment benefits for the first time, fell lower than expected to 345,000 in the week ending Jan. 6 from 381,000 the previous week. Economists polled by

Reuters

had predicted a number of 374,000. The tightening of the labor market contradicts the recent news of companies shutting down or having to lay off a large part of their workforce. However, the claims number may be revised, because many states submit preliminary data. The four-week average rose to 363,000 from 356,750. It is at its highest level since mid-July 1998, which indicates an overall softening in labor conditions.

Import and export prices

(

definition |

chart |

source

) fell in December. The Import Price Index fell 0.5 %, largely due to a 9.3% drop in oil prices. Excluding oil, the index had a 0.9% gain. The growth rate of import prices slowed for the third consecutive month, falling to 3.5% from 4.7% in November.

The

Consumer Comfort Index

(

definition |

chart ), which assesses consumers' confidence in the overall economy, fell to 23% for the week ending Jan. 7. It is its lowest in the past 12 months -- six points below the average for that period and 15 points below the high.

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