Investors unplugged high tech stocks last week.
Having led Wall Street higher last year, the techs crumbled faster in last week's turnaround.
The Nasdaq composite index, top-heavy with technology stocks, lost almost 3 percent last week, posting over half that loss on Wednesday, down 1.6 percent.
Analysts cite slow computer sales and concern about weakness in overseas markets.
The Dow industrial average, while no star performer, lost just under 2 percent.
This technology jolt covers plenty of ground. High-tech mutual funds posted net outflows of $95 million, Feb. 5 to March 12.
Nasdaq could fall more
"I don't think the worst is yet over for Nasdaq and the high technology sector," says Rao Chalasani, chief investment strategist at Everen Securities Inc. in Chicago.
"Nasdaq could drop another 4 percent or 5 percent," he says.
If the Federal Reserve, as many expect, raises interest rates tomorrow, Chalasani sees an immediate hit for tech stocks.
The reason: Most US high-tech firms depend heavily on overseas sales. Yet rising rates strengthen the dollar, which makes US exports - from IBM computers to Intel computer chips - expensive.
And that prospect lands directly on stock prices. IBM, traded on the New York Stock Exchange, fell 7.5 percent for the week to $132.5.
And the market grounded Nasdaq-traded Intel by 5.3 percent to $130.5.
On Friday, the 30-stock Dow Jones industrial average closed down 15.49 at 6804.79 points, a 130-point loss for the week.
The Nasdaq closed off 5.19 to 1254.07, a week's loss of 38.6.
The Nasdaq is the only major US index down this year, off almost 3 percent. The Dow is up 5.5 percent; the Standard & Poor's 500, up 5.85 percent.
But even with the clouds over technology, many analysts don't see a bear market in the woods.
"The major worry in the market now is the Fed," says Gene Jay Seagle, president of Tactics & Technics, a market consulting firm in Weston, Conn.
"But there has been so much money pouring into mutual funds that I just don't see the broader market falling much.
"I think the Dow will get to 8000 points this year. And there is now a good buying opportunity in technology stocks," Mr. Seagle says.
Technology may have already hit bottom last Wednesday, says Michael Murphy, editor of the California Technology Stock Newsletter.
Two tech groups
Murphy sees a split in the technology sector - with weakness in data/communications and strength in personal computers.
Combined, technology should post a decent year, he says.
On the merger front, First Bank System of Minneapolis, said it will buy US Bancorp of Portland, Ore., for $8.4 billion, creating the 14th-largest bank company in the US.
The merger news helped shares of US Bank and hurt First Bank System.
Tobacco stocks were snuffed for the second week, clobbered by the landmark settlement between Liggett Group, smallest of the US producers, and 22 states.
Liggett agreed to open documents that may reveal fraud and conspiracy by industry officials.