NEW YORK (CNN/Money) -
Technology stocks fell and the Nasdaq composite slid more than 40 points on Tuesday after Federal Reserve Chairman Alan Greenspan spoke before Congress, re-igniting fears of an interest rate hike.
Despite positive earnings reports in the sector, the tech laden Nasdaq dropped 2.1 percent or 41.80 points to 1,978.63. The AMEX Technology index shed 14.97 or 2.17 percent, ending the day at 673.53.
In his comments before Congress, Greenspan made statements that to some ears sounded like hints of a sooner-than-expected interest rate hike, saying that deflation will not hurt the country and that the economy can now handle higher rates.
One of the day's few bright spots was EarthLink Inc. (ELNK: up $0.40 to $9.49, Research, Estimates) The No. 3 Internet service provider reported a much narrower quarterly loss on lower costs and more subscribers. The news sent stock soaring in afternoon trade before Greenspan's speech tempered the markets.
EarthLink reported a first-quarter net loss of $11.8 million, or 7 cents a share, compared with a loss of $65.7 million, or 43 cents a share, a year earlier. The stock closed the day at $9.49, up 40 cents.
Most major tech companies were down at the end of the day, with Microsoft losing 20 cents to close at $25.33. Cisco Systems lost 3.3 percent to close at $22.11, and Oracle shed 32 cents and ended the day at $12.
Lucent Technologies (LU: down $0.44 to $3.89, Research, Estimates) fell 8.5 percent to end the day at $3.89, after reporting earnings that edged up from a year earlier and surpassed estimates.
This is the third straight money-making quarter for the New Jersey-based maker of phone network equipment, which announced that lower costs were able to offset revenues that declined nearly 9 percent.
AT&T Wireless, (AWE: up $0.25 to $13.82, Research, Estimates) which will announce its quarterly earnings early Friday morning, said on Tuesday that it lost 367,000 customers in the first quarter. The mobile phone services provider blamed the loss on technological problems and a new federal rule allowing subscribers to keep their phone numbers after they switch service providers.
The company did announce partial results early to coincide with the release of Cingular's results. Cingular, the venture between BellSouth (BLS: up $0.03 to $26.08, Research, Estimates) and SBC Communications, (SBC: down $0.05 to $24.36, Research, Estimates) agreed in February to acquire AT&T Wireless for $41 billion.
AT&T Wireless revenue totaled $3.75 billion, the same as a year earlier but down 11 percent from $4.21 billion in the previous quarter. The company ended the day up 1.8 percent to $13.82.
Cingular Wireless LLC reported first-quarter 2004 revenue up 8.4 percent to $3.9 billion on solid subscriber growth.
Cingular had net subscriber additions of 554,000 in the first quarter, bringing its nationwide cellular/PCS customer base to 24.6 million.
Other movers include defense stocks, which have jumped dramatically on safety fears and anxiety over the situation in Iraq. Today several companies that have been superstars over the past week took a tumble.
Taser International (TASR: down $34.31 to $84.39, Research, Estimates) fell 22 percent after the company reported earnings and sales that rose from a year earlier and beat estimates. Analysts say that with the stock up more than 300 percent this year, investors decided to take profits.
Taser has been one of the best performers on any market over the last few weeks, earning $3.55 million, or 24 cents a share, in the latest quarter, up from $229,000, or 3 cents a share in the year earlier.
Ipix (IPIX: down $4.31 to $8.33, Research, Estimates) also dove, with the creator of 360-degree imaging software falling 34.1 percent to $8.33. Thanks to anxieties created by the war on terror, Ipix has been transformed from a penny stock into one of the Nasdaq's most active companies.
And reporting after the close,Motorola, (MOT: down $0.48 to $16.22, Research, Estimates) the world's second largest maker of cell phones, posted sharp increases in first-quarter earnings and sales that were well ahead of Wall Street's expectations, causing the stock to skyrocket more than 25 percent in after-hours trading.
"Motorola's results did not just surpass our estimates, consensus, and management guidance, these 1Q 04 numbers were downright huge. " said Loop Capital Markets analyst Ren Zamora in a research note that was put out shortly after Motorola's numbers were released.
Looking at the earnings calendar, reports will come in Wednesday morning from Allegheny Technologies, (ATI: down $0.70 to $10.88, Research, Estimates) Sybase Inc., (SY: down $0.49 to $18.00, Research, Estimates) Imation Corp (IMN: down $0.28 to $39.71, Research, Estimates) and Sirius Satellite Radio. (SIRI: down $0.18 to $3.80, Research, Estimates)
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