NEW YORK (CNNfn) - Big name technology stocks gave back their gains Tuesday, dragged down in part by a report from one of Wall Street's most influential strategists who recommended that investors back away from the sector.
"For the first time in a decade, our model portfolio is no longer recommending an overweighed position in technology," Goldman Sachs investment strategist Abby Joseph Cohen wrote in a research report Tuesday.
Cohen, who was reiterating a position she first stated earlier in the month, said investors should not expect the kind of stellar returns that many tech stocks rang up over the past 18 months.
She added, however, that technology still represents the largest single sector weighting in the model portfolio, and she expects to see strong first-quarter earnings from technology companies.
Even so, blue-chip tech stocks, most of which headed higher on Monday, paid the price Tuesday.
Cisco Systems (CSCO: Research, Estimates) shares ended the session 2-3/16 lower at 77-7/8, a 2.7 percent decline on the day. IBM (IBM: Research, Estimates) fell 4-5/8, or 3.7 percent, to 122-1/4. Intel (INTC: Research, Estimates) shares ended down 6-7/8 at 135-13/16, a 4.8 percent slide.
America Online (AOL: Research, Estimates) fell 2-3/8, or 3.2 percent, to 72-1/16. Hewlett-Packard (HWP: Research, Estimates) shares fell 5-3/8, ending 3.7 percent lower at 140-13/16. Lucent (LU: Research, Estimates) ended the session 1-3/16, or 1.8 percent lower at 64-1/16. Sun Microsystems (SUNW: Research, Estimates) shares fell 4-3/8 to 100-5/8, a 4.2 percent decline on the day.
Meanwhile, shares of Microsoft (MSFT: Research, Estimates), which missed out on the rally in technology blue-chips Monday, headed higher Tuesday on news that the judge heading its antitrust case would postpone his final ruling, giving the two sides more time to negotiate a settlement.
 Microsoft shares, which slid nearly 7 percent on Monday, ended Tuesday's session 1/4 higher at 104-5/16. Analysts said they expect trading in Microsoft to be extremely volatile until a settlement is reached or the judge delivers a verdict.
The tech-laden Nasdaq composite index ended Tuesday's session 124.56 lower at 4,834, a 2.5 percent slide on the day. Meanwhile, the Dow Jones industrial average edged down 89.74 to 10,936.11, and the S&P 500 slipped 16.13, ending the session a little more than 1 percent lower at 1,507.73.
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Some market observers said Tuesday that they expect big-name tech stocks to regain strength as money managers lock in on the sector's top performers in order to dress up their portfolios before the end of the first quarter.
"A lot of the mutual fund managers, especially those that are in the blue chips, are just biding their time, trying to pick a point to stuff the ledger with some of the better-name blue chips," said Paul Cherney, a market analyst at Standard & Poor's.
Toward the end of each quarter, there typically is a large amount of stock-trading activity as money managers engage in "window dressing," buying the best performing stocks to dress up their portfolios.
And investors should expect some volatility in the sector for the remainder of the week, according to Larry Rice, chief investment officer at Josephthal Lyon & Ross.
"Money is going to go where it can make money on a short term basis," Rice said. "You think tech is down but a day or two later it's right back up. We're at the end of a quarter and you'll see a lot of gyration."
Chips hard hit
Semiconductor issues took some of the hardest knocks in Tuesday's market slide, sending the Philadelphia Stock Exchange's semiconductor index, or Soxx, 44.2 lower to 1,261.26, a 3.4 percent decline on the day.
 Stocks heading lower included: Actel (ACTL: Research, Estimates), off 2-1/8, or 6.6 percent, at 30-1/4; PMC-Sierra (PMCS: Research, Estimates), which slid 15-3/4, ending 6.8 percent lower at 215-13/16; Rambus (RMBS: Research, Estimates), which fell 23-1/4, or 6.7 percent, to 322-1/14; Sandisk (SNDK: Research, Estimates), off 13-7/16 at 131-5/8, a 9.3 percent slide; and Altera (ALTR: Research, Estimates), which fell 5-13/16, ending the session 6.2 percent lower at 87-11/16.
Meanwhile, shares of Linear Technology (LLTC: Research, Estimates), which makes analog semiconductors, soared 7-1/32, or 13.8 percent, to 58-1/16. Late Monday, Standard & Poor's said it would list the stock on its widely-tracked S&P 500 index.
Vitesse (VTSS: Research, Estimates) also bucked Tuesday's chip-stock downturn, rocketing 8-3/8, or 8.7 percent, to 104-5/16. Adam Harkness analyst Rick Faust upped his rating on Vitesse stock to "strong buy" from "accumulate," Tuesday, following its acquisition of privately held semiconductor firm Orologic for $450 million in stock.
PaineWebber's David Wong upped his price target to 200 from 135 and maintained his "buy" rating on Vitesse Tuesday. Dale Pfau at CIBC World Markets raised his price target to 150 from 100 and reiterated a "strong buy" recommendation.
Dot.coms take a drubbing
Dot.coms also were battered in Tuesday's sell-off.
The Dow Jones composite Internet index ended the session 14.85 lower at 444.22, a 3.2 percent slide on the day.
 Online retailing giant Amazon.com (AMZN: Research, Estimates) fell 3 to 70-1/8, a 4.1 percent slide. eToys (ETYS: Research, Estimates) shares fell 11/16, or 6.4 percent, to 10-1/8. Online software vendor Beyond.com (BYND: Research, Estimates) edged down 1/32 to 5-9/32.
Internet auctioneer eBay (EBAY: Research, Estimates) slipped 16, or 6.7 percent, to 223-13/16, even after PaineWebber analyst Sara Farley boosted her price target to 285 from 225, based on higher growth and cash flow assumptions. Farley said eBay has "articulated several new initiatives that should expand the company's reach significantly."
Shares of Rare Medium (RRRR: Research, Estimates) gave back some of Monday's sharp gains. The company, which provides Internet services to businesses, forged an alliance with IBM Tuesday under which it will develop electronic business software and services for IBM's Web Integrator Initiative.
Rare medium shares, which added more than 16 percent on Monday, edged down 7/16 Tuesday, ending the session at 57-5/8.
Online directory Switchboard.com (SWBD: Research, Estimates) sank 3-1/16, or 8 percent, to 35-1/16. J.P. Morgan on Tuesday initiated coverage of that stock, with a "buy" rating and a 12-month price target of 60.
Internet marketing firm 24/7 Media Inc. (TFSM: Research, Estimates) fell 3-1/16, or 8 percent, to 35-1/16 after announcing a marketing deal with the country's number two Internet service provider, EarthLink Inc. (ELNK: Research, Estimates), which slipped 3/8 to 20-15/16.
Shares of Spyglass (SPYG: Research, Estimates), which spiked on Monday after OpenTV (OPTV: Research, Estimates) said it would buy the company, continued their advance, ending Tuesday's session 2-3/4 higher at 85-1/8, a 3.3 percent gain on the day.
OpenTV shares inched up 11/32 to 129-3/8. 
-- from staff and wire reports
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