SAN FRANCISCO -- Talk about a one-two punch. Chipmakers were pummeled today by a downgrade of

Micron Technology

(MU) - Get Report

and more negative news from the PC makers.

Declines in both boxmakers and chips were enough to keep the Nasdaq in negative territory. Losses came despite a recovery in the bond market, which was blamed for weakness the past few sessions.

Micron Technology closed 8 13/16 lower, a drop of 13%, at 58 after

Goldman Sachs

took the stock off its recommended list and rated it as market outperform. According to

Reuters

, Goldman analyst Joe Moore cited valuation concerns and potential weakness in Micron's chip market for the downgrade.

Other chip makers suffered too.

Intel

(INTC) - Get Report

closed down 7 13/16, or 6%, at 119 15/16.

Texas Instruments

(TXN) - Get Report

was off 7 1/16, or 7.3%, at 89 3/16.

Advanced MicroDevices

(AMD) - Get Report

was the lone bright spot among the chip makers, benefiting from a report from

PC Data

that the AMD-K6 desktop PC processors outsold all Intel-based desktop PCs in the U.S. retail market for the first time in January. It closed at 18 1/8, flat.

The chain reaction sent equipment manufacturers lower as well.

KLA Tencor

(KLAC) - Get Report

closed down 5 1/16, or 8.9%, at 51 13/16 and

Applied Materials

(AMAT) - Get Report

closed down 8 1/8, or 13%, at 55 5/8.

Novellus

(NVLS)

closed 6 points lower, or 9.2%, at 59 1/16.

Adding to the pessimism on chipmakers were negative comments on the boxmakers, most notably

Compaq

(CPQ)

, which closed down 5 5/8, or 14%, at 35 3/8. The company was downgraded to neutral from buy by

PaineWebber

due to weakness in sales during the first six weeks of the quarter. Both

Credit Suisse First Boston

and

Merrill Lynch

also cut

earnings estimates on the company.

Michael Kwatinetz, analyst with CS First Boston, said the nature of the business suggests that whenever there are forecasts of shortfalls in the PC industry, the reaction in the market will be great, though in this case it may be over-exaggerated.

While January may not have been as good a month for the boxmakers, Kwatinetz said he visited

IBM

(IBM) - Get Report

today and the company suggested it will have a solid March quarter, which could mean that things picked up in the entire industry in February.

"It's not an Armageddon," he said of the outlook for the quarter.

PC makers did suffer today.

Dell

(DELL) - Get Report

closed 1 5/8 lower at 80 1/8, while

Gateway

(GTW)

closed 7 7/16 lower, or 9%, at 72 11/16.

Hewlett-Packard

(HWP)

closed 4 3/4 lower, or 6.7%, at 66 7/16. IBM closed 3 7/8 lower at 169 3/4.