Updated from 2:26 p.m. ET

Punished for the bad news of a slowing economy without the mitigating good news of an interest rate cut, tech stocks led the

Comp

to a down close today for the seventh consecutive session.

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A number of big-name tech stocks again set 52-week lows.

Cisco

(CSCO) - Get Report

closed today down $5.25, or 12.6%, to $36.50, way off after a downgrade based on slower corporate spending. Other networking stocks fell as well after

Foundry Networks

warned about earnings as corporate spending slows.

Even before

reporting that sales for its first quarter had fallen 30% sequentially,

Micron Technology

(MU) - Get Report

had contributed to the 6.5% drop in the

Philadelphia Stock Exchange Semiconductor Index

. Micron, one of the largest producers of extended memory chips for PCs, closed down 94 cents, or 14.2%, to $29.81.

In a note this morning,

Credit Suisse First Boston

cut its growth estimates for semiconductors to 6% from 22% for 2001. While noting inventory stockpiling in PC and wireless chips, the note added that there is even incremental slowing in the hot communications chip industry.

One of the hottest com chip companies

, Applied Microcircuits

(AMCC)

, fought the downward trend of the market today on the news that it had been added to the

S&P 500

index, before closing down $5.44, or 8.8%, to $56.12.

TheStreet.com Internet Index

dropped 9.8% today as more analysts reduced ratings on giant portal

Yahoo!

(YHOO)

in the face of lower e-commerce growth and a withering online ad market.

Amazon

(AMZN) - Get Report

,

eBay

(EBAY) - Get Report

and

America Online

(AOL)

fell as well.

US Bancorp Piper Jaffray

and

CIBC World Markets

reduced their ratings on Yahoo! to buy from strong buy. US Bancorp analyst Safa Rashtchy wrote that Yahoo wouldn't meet expectations that e-commerce would account for 10% of total revenues by the fourth quarter.

Yahoo! closed down 6 cents, or 0.2%, to $27.94, a 52-week-low.

Fellow Web heavyweight Amazon also closed at a 52-week low, down $1.56, or 8.6%, to $16.69. eBay closed down 13.5% and AOL was down 8.6%.

Business-to-business software stocks

VerticalNet

(VERT)

announced last night that it would supply the technical support for Converge, while selling the high-tech marketplace its chip. The news was a blow to e-commerce software producer

Commerce One

(CMRC)

, which had sought the contract in recent months.

Not everyone thought it was a good idea.

WR Hambrecht

downgraded VerticalNet over the short-term effects of the deal and it closed off six cents, or 1.16%, to $5.31.

Thomas Weisel

downgraded Commerce One, saying the loss of the Converge contract could be seen as negative. Commerce One 's finish at $8.31, or 26.8%, to $22.69 was a 52-week low.

2:26 p.m. ET: Tech Leads Comp Into Deep Red Sea

Earnings warnings and reports from tech stocks are the lump of coal in the

Nasdaq's stocking, already disappointed by not getting its Christmas present of an interest rate cut yesterday.

Warnings amplified by the creeping sense of doom over next year's corporate capital expenditure and information technology budgets sent ripples from one company to the next today.

Two of the biggest,

Hewlett-Packard

(HWP)

and

IBM

(IBM) - Get Report

, were brushed by the expected slowdown in IT spending and a slowing economy.

Merrill Lynch

analyst Tom Kraemer downgraded IBM to neutral from accumulate this morning, writing that slowing IT spending and a weaker economy could hurt revenues for the coming quarters.

An estimated weaker IT universe and slow orders for Unix servers also got H-P reduced from accumulate to neutral by Kraemer.

IBM was trading down $4.94, or 5.5%, to $85.31. H-P also was trading down, $1.63, or 5.2%, to $29.69.

Jabil Circuits

(JBL) - Get Report

yesterday reported that its first-quarter earnings were below Street expectations and that sequential growth would decline in the second quarter. The news from Jabil, an electronics contract manufacturer, came a day after a warning of weaker revenues from contract printed circuit board maker

Merix

(MERX)

brought down some fellow contract manufacturers. Jabil was downgraded by

SG Cowen

,

Goldman Sachs

and

Prudential

.

Jabil was trading down $7.19, or 25.8.%, to 20.63. Other contract manufacturers also were down, including

Sanmina

(SANM) - Get Report

, which dropped 8.5% in Tuesday's session on the Merix news. Sanmina was trading off another 5%. Merix, which lost 51% in yesterday's session, was trading down another 1.5%. Even industry leader

Solectron

(SLR)

, which rose 18.8% on its very positive earnings report Monday, was trading down today 6.8% today.

Networker

Foundry Networks

also warned that revenues for the current quarter would not meet expectations, blaming declines in capital expenditures were resulting in lower earnings.

A Merrill Lynch note downgrading Foundry to neutral from accumulate mentioned that Foundry also was seeing competitive pressure from some

Cisco

(CSCO) - Get Report

products in its network switching and routing business.

SG Cowen

,

ABN Amro

and

Robertson Stephens

all reduced ratings as well.

Foundry was dropping $17.56, or 57.4%, to $13.06 in recent trading.

Foundry's miss also brought down competitor

Extreme Networks

(EXTR) - Get Report

. SG Cowen downgraded the networker to neutral from buy, mentioning in a note this morning that Foundry's fall reflected on others in its space. In trading this morning, Extreme was plunging 32%.

Cisco hasn't escaped the concerns over capital expenditures, either. Merrill Lynch analyst Mike Ching reduced his rating on the networker to accumulate from buy. Ching wrote he lowered the ratings over "persistent concerns over service provider capital spending and emerging fears over a slowdown in corporate IT spending."

Cisco, which closed at a 52-week low yesterday, was trading down another 12.7% in recent trading.

Another warning ripple came from semiconductor and component distributor

Vishay Intertechnology

(VSH) - Get Report

after the close of the market yesterday.

Vishay's warning got its rating reduced to neutral from buy by

Bear Stearns

. Analyst Thomas Hopkins then reduced the ratings of fellow component distributors

Avnet

(AVT) - Get Report

,

Arrow Electronics

(ARW) - Get Report

and

AVX

(AVX) - Get Report

, writing that the same deteriorating fundamentals that hurt Vishay would affect the other companies as well.

In recent trading, Vishay was down $3.56, or 19.1%, to $15.06. Avnet was off 4.3%, Arrow was down 3.5% and AVX was down at 8.9%.