Tech Rally Fades as PC Makers Catch a Virus

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The high-tech rally promised by this morning's futures activity so far has failed to materialize, with major tech indices slightly lower as blue-chips head tentatively higher.

Before the open, the

Nasdaq 100

futures were up 15 and indicated an even bigger bounce for tech stocks than for the

Dow Jones Industrial Average

and other big-cap measures. The indication seemed to hold up at the open, which saw the

Nasdaq Composite Index

rise almost 11 to 1637 and the cash Nasdaq 100 rise more than 11 to 1074.

But then the early strength vanished like a fried peanut-butter-and-banana sandwich at

Graceland

. By noon EST, the Comp was down more than 1 to 1625 and the Nasdaq 100 was down 3 to 1059. Nor was there pretty news on other major tech indices, with the

Morgan Stanley High-Tech 35

down more than 3 to 460 and the

Philadelphia Stock Exchange Semiconductor Index

down almost 3 to 309.

"It's very, very sloppy," said one tech-focused trader. "PCs are weak.

Micron Electronics

was halted for a while and now it's down, and

Dell

and

Compaq

are down behind that.

AMAT's

not really holding up that well. There's definitely no conviction on the buy side."

Micron Electronics

(MUEI)

was chopped 2 5/8, or 19%, to 11 1/4 after warning that its first-quarter net income would be "minimal," citing high inventories and price pressures. The 13-analyst

First Call

consensus estimate, now hastily being revised in firms all over Wall Street, called for a profit of 22 cents per share versus the year-earlier 27 cents. Among MUEI's fellow PC makers, Dell

(DELL) - Get Report

was off 1 to 84 5/8, Compaq

(CPQ)

was off 2 1/16 to 64 7/16 and

Gateway 2000

(GTW)

was off 1 3/8 to 29 1/16.

As for

Applied Materials

(AMAT) - Get Report

, it was down 1 3/16 to 36 7/16 despite late yesterday reporting fourth-quarter operating earnings 3 cents per share better than expected and despite guiding first-quarter estimates up by 3 cents. Other semiconductor-equipment makers suffered as well, with

KLA-Tencor

(KLAC) - Get Report

down 2 9/16 to 45,

Teradyne

(TER) - Get Report

down 1 3/8 to 37 1/4 and

PRI Automation

(PRIA)

down 1 3/4 to 37 7/8.

Non-high-tech indices were faring better at midday, with the Dow up 33 to 7860, the broad

S&P 500

up 3 to 962 and the small-cap

Russell 2000

up 1 to 437. Bonds were selling off modestly, with the yield on the benchmark 30-year Treasury rising to 6.07%.

One tech stock getting lots of attention (if not much movement) was

Unisys

(UIS) - Get Report

, which was second to Compaq on the

New York Stock Exchange's

most-active list. Unisys was unchanged at 14 9/16, but a whopping 5.8 million shares had changed hands by 12:03 p.m. -- 13.53 times yesterday's volume of 425,778. Most of the volume came from three big block trades: a 3,083,000-share block at 9:43 a.m. on the NYSE, on an uptick to 14 9/16; a 1,150,000-share block at 10:07 on the

Chicago Stock Exchange

, on an uptick to 14 9/16; and a 531,000-share block at 10:48 on the NYSE, on an uptick to 14 5/16. A Unisys spokesman didn't immediately return a call for comment.