Tech leads decline

NEW YORK (CNNMoney.com) -- Technology shares slumped early Tuesday afternoon, dragging down the Nasdaq and keeping the broader market in check, as investors geared up for comments from Federal Reserve chairman Ben Bernanke due later in the day.

The Dow Jones industrial average (down 23.71 to 12,638.03, Charts) and the broader S&P 500 (down 2.69 to 1,444.30, Charts) index both lost a few points roughly 3 hours into the session.

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The Nasdaq (down 13.66 to 2,456.94, Charts) composite slid 0.5 percent.

After a big rally last week, stocks struggled Monday. That same sense of caution kept stocks near unchanged Tuesday morning, but by the afternoon, the tone had turned more negative.

Fed Chairman Bernanke was due to speak in the afternoon. Chicago Fed president Michael Moskow and San Francisco Fed president Janet Yellen are both due to speak later in the day as well.

Investors also took in comments from Treasury Secretary Henry Paulson, who told Congress that the U.S. economy is slowing to a steady growth rate, allowing the government to focus on reforms to Medicare and Social Security.

Paulson's comments Tuesday were part of a broader discussion on President Bush's proposed $2.9 billion budget for the year, announced Monday.

Among stock movers, a variety of technology shares retreated, led by the influential semiconductor sector following a profit warning from National Semiconductor late Monday.

Beyond that, there didn't seem to be any one particular catalyst dragging on stocks, said Tom Schrader, managing director of U.S. listed trading at Legg Mason.

"It's kind of directionless right now," Schrader said, noting that the economic calendar doesn't pick up until next week and a lot of the major earnings are already out.

"You had oil getting up closer to $60 a barrel earlier and that was making people a bit nervous, so that's something to keep an eye on," he added.

Crude oil for March delivery rose 41 cents to $59.15 a barrel on the New York Mercantile Exchange.

In corporate news, National Semiconductor (down $1.01 to $22.31, Charts) warned late Monday that revenue in its fiscal third quarter will fall more substantially from the second quarter than previously thought, due to slower shipments. Shares dropped about 4 percent.

A variety of chip stocks fell, including Advanced Micro Devices (down $0.37 to $15.23, Charts) and Broadcom (down $0.76 to $31.38, Charts). The Philadelphia Semiconductor (down 7.31 to 459.81, Charts) index, or the SOX, lost 1.3 percent.

In merger news, mortgage insurance company MGIC Investment (up $6.75 to $69.68, Charts) said it is buying rival Radian Group (up $5.55 to $66.39, Charts) in a $4.9 billion stock swap.

Private-equity group Blackstone boosted its offer for Equity Office Properties (up $0.43 to $55.89, Charts) to $23 billion, bringing its bid to just below the counter offer made by Vornado Realty Trust (up $1.86 to $126.96, Charts).

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by a narrow margin on volume of 680 million shares. On the Nasdaq, decliners topped advancers by four to three on volume of just under 1 billion shares.

COMEX gold for March delivery rose $1.60 to $657.70 an ounce

Treasury prices reversed course from the morning, turning higher and sending the yield on the benchmark 10-year note to 4.79 percent from 4.81 percent late Monday. Bond prices and yields move in opposite directions.

In currency trading, the dollar turned higher versus the yen after Paulson said there was nothing fundamentally wrong with the yen's weakness and that Japanese officials haven't been interfering to keep the yen near 20-year lows.

The dollar continued to slide versus the euro.

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