Updated from 2:11 p.m. EST with new stock prices

Tech stocks started the year lower as Wall Street grappled with weak economic data in the manufacturing sector and soaring crude oil futures.

Online retailer Amazon.com ( AMZN) bucked the trend, rising 3.9% after the stock was upgraded to buy from hold by a Citigroup analyst. Amazon.com's fourth-quarter results could "modestly" top expectations, said the analyst in a note, adding that his firm sees a 10% upside to the Street's 2008 earnings-per-share estimate for the company. Amazon.com gained $3.61 to $96.25.

Yahoo! ( YHOO) gained 2% after a ThinkEquity analyst upgraded the stock to buy and put a price target of $32 on the stock. Yahoo! shares are down nearly 22% since Oct. 22 and the stock at its current price offers an "an attractive entry point," said the analyst. Yahoo! was up 46 cents to $23.72.

Chip stocks were down after Banc of America analysts wrote in a research note that they are adopting a more cautious stance on the sector. The recovery in the chip sector last year has "run its course," analysts said, and now industry-wide inventories are slightly above equilibrium levels.

Intel ( INTC), which was downgraded to neutral from buy, was off $1.31, or 4.9%, to $25.35. AMD ( AMD) fell 36 cents, or 4.8%, to $7.14, touching a new 52-week low.

In addition, Texas Instruments ( TXN) fell $1.05, or 3.1%, to $32.35, and LSI ( LSI) was down 43 cents, or 8.1%, to $4.88.

Qualcomm ( QCOM) was down 96 cents, or 2.4%, to $38.39 following a federal court injunction on Monday to block it from selling mobile phone chips that infringe on rival Broadcom's ( BRCM) patents. Broadcom rose 18 cents, or 0.7%, to $26.32.

IBM fell 3.2% after the company confirmed that it has acquired Israeli data storage startup XIV Information Systems. Terms of the deal were not disclosed, but earlier media reports priced the purchase between $300 million and $350 million. IBM fell $3.41 to $104.69.

Video-games publisher Activision ( ATVI) started the New Year on a sour note. The company's stock fell $1.27, or 4.3%, to $28.43.

Apple ( AAPL) continued its retreat after nearing the $200 mark on Dec. 26. The stock was down $3.24, or 1.6%, to $194.84.