Nasdaq battered by Intel

NEW YORK (CNNMoney.com) -- Tech stocks slumped Wednesday morning on disappointment about Intel's earnings and outlook, dragging down the broader market, as investors continued the miserable start to 2008.

The Dow Jones industrial average (INDU) lost 0.7 percent nearly 90 minutes into the session, while the broader S&P 500 (INX) index lost 1 percent. The Nasdaq composite lost 2.2 percent.

Stocks tumbled Tuesday after Citigroup's steep quarterly loss and a big drop in retail sales exacerbated fears of a recession. The selloff left the Dow at a 9-month low and the S&P 500 and the Nasdaq at 10-month lows.

However, the decline didn't spark a snapback rally Wednesday, as it sometimes has. Instead, stocks tumbled anew, this time in response to Intel.

Intel (INTC, Fortune 500) reported quarterly results and an outlook that disappointed investors late Tuesday. Intel shares slipped almost 13 percent and pressured the broader technology sector.

Microsoft (MSFT, Fortune 500), Cisco Systems (CSCO, Fortune 500), Dell (DELL, Fortune 500) and Yahoo! (YHOO, Fortune 500) were among the big technology shares dragging on the Nasdaq and also influencing trade in the broader market.

One tech standout was BEA Systems (BEAS), which jumped 19 percent in active Nasdaq trade on reports that it has agreed to be bought by Oracle in an $8.5 billion all-cash deal. Oracle (ORCL, Fortune 500) stock was little changed.

In other news, JP Morgan (JPM, Fortune 500) reported weaker earnings that missed estimates amid a $1.3 billion writedown for bad mortgage debts. However, the financial leader also reported higher revenue that topped estimates. Shares gained in morning trade.

Fellow bank Wells Fargo (WFC, Fortune 500) reported weaker quarterly earnings due to a big subprime hit as well. However, the bank's earnings topped forecasts by a penny, sending shares higher.

In economic news, the December Consumer Price Index (CPI) rose 0.3 percent versus a year ago, while CPI at the core level - which strips out volatile food and energy - rose 0.2 percent. Economists surveyed by Briefing.com expected both CPI and core CPI to rise 0.2 percent.

The Fed's beige book read on the economy is due this afternoon. Additionally, the Joint Economic Committee holds a hearing in Washington on what action the Federal Government should take to help avoid a recession.

Treasury prices slumped, raising the yield on the 10-year note to 3.71 percent from 3.68 percent late Tuesday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for February delivery fell $100 to $90.90 a barrel on the New York Mercantile Exchange after the government's weekly inventory report showed a surprise jump in crude stocks.

COMEX gold for February delivery fell $13.30 to $889.30 an ounce.