CHICAGO (CNN/Money) -
Technology stocks continued to pull back Thursday as investors took profits from shares that had risen sharply over the past few weeks.
The Nasdaq Composite Index fell 17.07 to close at 1,489.69, according to preliminary results.
Among technology blue chips, Microsoft (MSFT: Research, Estimates) slipped 24 cents to $25.75, Hewlett-Packard (HPQ: Research, Estimates) shed 13 cents to $17.09, and Intel (INTC: Research, Estimates) lost 29 cents to $18.87.
Although tech shares have struggled the last two sessions, market watchers believe it's simply a healthy retreat after the recent earnings-fueled rally.
"I think it's a natural pullback for the amount that we've risen in a short period of time," said Michael Cohen, director of research at Pacific American Securities. "We were getting a little overextended."
Although the signals are still mixed regarding whether demand for technology products will improve later this year, Cohen believes tech shares have already hit bottom and that the steady climb upward will continue over the near and long term.
"The move that we've had was more than just a bear-market rally," he said. "The free fall in technology stocks that has lasted three years is over."
While better-than-expected earnings news has helped boost tech shares the past few weeks, today's financial reports weren't exactly heartening to investors.
Electronic Data Systems (EDS: Research, Estimates) dropped 58 cents to $17.06 after the computer-services firm posted a first-quarter loss. The company added that it would miss analysts' forecasts for its second-quarter earnings and that it plans to announce a turnaround strategy by mid-June.
In other earnings news, cable provider Comcast (CMCSA: Research, Estimates) fell 20 cents to $30.22 after reporting a wider-than-expected first quarter loss as the company integrates AT&T Broadband.
Elsewhere, Nextel Communications (NXTL: Research, Estimates) lost 54 cents to $13.28 after Goldman Sachs downgraded the wireless-communications company to "underperform" from "in line."
Goldman Sachs also had an impact on the networking sector by initiating coverage of three key firms in the sector. Cisco Systems (CSCO: Research, Estimates) fell 26 cents to $15.22, while Juniper Networks (JNPR: Research, Estimates) lost 29 cents to $11.90. Both companies received an "in line" rating. Ciena (CIEN: Research, Estimates), to which Goldman assigned an "underperform" rating, fell 29 cents to $5.23.
On the upside, an upgrade from Salomon Smith Barney helped boost shares of Apple Computer. The brokerage raised its rating on the stock to "in line" from "underperform," citing the strong performance of the company's new online music store and sales of its iPod digital music player. Apple (AAPL: Research, Estimates) shares gained 35 cents to $18.
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