NEW YORK (CNNfn) - The Nasdaq composite index plummeted over 280 points Wednesday, its second largest point loss ever, as investors continued to dump technology stocks like Microsoft and Intel, after an influential analyst reduced Microsoft's revenue outlook.
Late in the day the selling spilled over into the Dow Jones industrial average, of which Microsoft is a component. Other technology members of the blue chip index, like Hewlett-Packard, IBM, and Intel, also fell.
The losses mean that the Nasdaq has underperformed the Dow for the first time in 2000. Year-to-date, the Nasdaq is down 6.7 percent, while the Dow is off 3.2 percent.
 The Nasdaq plunged 286.29 points, or more than 7 percent, to 3,769.61. The tech-heavy indicator is down around 25 percent from the high of 5,048.62 set March 10. Wednesday marked the first time the Nasdaq closed below 4,000 since Jan. 31.
Analysts said the market still has some room to fall. "My sense is we'll probably make a short-term low very soon, only because the rubber band is stretched so tightly," said Joseph Barthel, chief investment strategist at Fahnestock & Co.
The Nasdaq has now set three point-loss records within the past two weeks — falling 349 points on April 3, shedding 258 points on Monday and dropping over 280 points Wednesday.
 The Dow fell 161.95 points to 11,125.13, hurt by its technology components. "It was only 4 out of the 30 issues that drove (the Dow) down," said Art Hogan, chief market strategist at Jefferies & Co.
The broader S&P 500 index dropped 33.42 to 1,467.17.
Market breadth was mixed. Advancing issues outpaced declining ones 1,532 to 1,430 on the New York Stock Exchange, as volume reached over 1.1 billion shares. But Nasdaq losers beat winners 3,334 to 1,011, as more than 1.8 billion shares changed hands.
The dollar rose against the euro but was weaker versus the yen. Treasury securities fell.
Techs continue to slide
Technology stocks have come under fire within the past month, as analysts continue suggesting that technology issues may be overvalued.
"As we sit back and digest these volatile days, one thing definitely comes to mind -- and the word is rotation," wrote Ralph Acampora, director of technical research at Prudential Securities, in a note to clients. "As long as we can see money move from one sector to another, that is constructive. Hence, stock selection is key."
Heeding these warnings, investors moved their money from the tech-heavy Nasdaq into blue chip stocks. The day's sell-off started after Goldman Sachs cut its revenue estimate for Microsoft's fiscal third quarter ended March 31.
Microsoft (MSFT: Research, Estimates) slid 4-1/2 to 79-3/8 after Goldman's Rick Sherlund cut his projected quarter revenue estimate to $5.75 billion from $5.95 billion. The news builds on the software publisher's woes after a federal judge last week found the company in violation of antitrust laws.
Some say the losses may not be over. Rich Schottenfeld, general partner at Schottenfeld Associates, told CNN's In the Money that a new wave of tech selling by mutual fund holders could spark a further downdraft. (386K WAV) (386K AIFF).
Other technology leaders also suffered. Cisco Systems (CSCO: Research, Estimates) fell 5 to 65, Intel (INTC: Research, Estimates) dropped 8-7/8 121-7/8, and Dell (DELL: Research, Estimates) shed 4-1/16 to 51-3/8.
In Dow stocks, IBM (IBM: Research, Estimates) fell 6-5/8 to 112-3/4, Hewlett-Packard (HWP: Research, Estimates) shed 11-5/16 to 134-1/2.
Financials' performance not enough to lift Dow
Despite the heavy tech sell-off on the Dow, financial stocks were the main beneficiaries of the sinking Nasdaq. Still, analysts were calm in the face of the sell-off, saying it reduced some of the speculative froth in the market.
"We feel that what's going on right now is nothing more than a needed correction," said Christopher Ainsworth, president of Goodworth Holding, told CNN's Street Sweep.
Mark Klee, manager of the John Hancock Technology Fund, agreed. "I think a lot of these stocks had gotten ahead of themselves," said Klee, who predicted the Nasdaq is near its bottom.
Wall Street has been waiting for strong earnings to support tech stocks. Analysts say that meeting earnings prognostications is not enough to boost technology firms. Instead, these companies need to outperform the forecasts.
They may be rewarded after the close of trading Wednesday, when Advanced Micro Devices (AMD: Research, Estimates) posts profit for the first three months of 2000. Advance Micro shed 5-5/8 to 65.
J.P. Morgan (JPM: Research, Estimates) jumped 1-15/16 to 136-11/16, after posting stronger-than-expected quarterly earnings of $3.37 a diluted share. That's above the predicted $2.81 a share and the $3.01 reported a year earlier.
American Express (AXP: Research, Estimates) gained 5-5/16 150-1/2.
Time Warner Inc. (TWX: Research, Estimates), CNNfn's parent, also reported better-than-expected quarterly operating earnings of 5 cents a share, up from the forecast 2 cents per share. Still, Time Warner shares slid 5-3/4 to 90.
In deals announced Wednesday, ice cream maker Ben & Jerry's (BJICA: Research, Estimates) was scooped up by Unilever (UN: Research, Estimates), Europe's largest consumer goods maker. Balancing the scales, Unilever also agreed to acquire U.S. diet-food specialist Slim-Fast Foods Inc. for $2.3 billion in cash.
Ben & Jerry's gained 8-1/8 to 43-1/16, while Unilever rose 1-1/16 to 51-1/4. 
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