Applied Materials

(AMAT) - Get Report

was down 2.5% in midmorning after the chip-equipment sector was downgraded by several analysts who expressed doubts about future capital spending in the semiconductor industry. Among the firms lowering ratings or estimates for a slew of stocks were

Merrill Lynch

,

Prudential

and

Salomon Smith Barney

.

Among the stocks affected,

Electro Scientific

(ESIO) - Get Report

touched 52-week low of $21.50 and was down 7.9%,

KLA-Tencor

(KLAC) - Get Report

was down 2.5% and

Novellus

(NVLS)

was down 2.8%.