The technology-heavy Nasdaq lost more than 570 points before rebounding in the afternoon to close at 4,149, down 75 points. The Dow Jones exchange yesterday closed at 11,175, down 47 points. Yesterday, Nasdaq dropped 349 points in expectation of the Microsoft ruling.
Microsoft shares dropped yesterday to US$88.7, a loss of $3 per share equivalent to a 3.3 percent decline in value. Yesterday, the software giant's shares closed at $90.87, a $15.3 decline, or a fall of 14.5 percent.
Despite the volatile nature of the market, one analyst yesterday said technology stocks are still strong.
"It seems as if the Microsoft ruling was one of many reasons why investors were selling," Sam Stovall, an investment strategist with Standard & Poors, said in a phone interview. "Valuations (of stocks) are high in general, and investors were taking profits after the first (calendar) quarter. It became a cascading effect."
Other investors with unrealistic expectations sold off in a panic, Stovall added. "There were people who bought expensive stocks with high growth expectations," he said. "They were day traders and gamblers who bailed out when they saw an erosion of prices."
Standard & Poors still rates the technology sector as strong, designating more than 40 technology company stocks as a "buy," he said.
"There is still value in technology stocks that have earnings, like IBM, Cisco and Sun," Stovall said.
Cisco Systems stock closed yesterday at $73.1, up 18 cents, or 0.26 percent; IBM was at $121, up 87 cents, or 0.72 percent; and Sun Microsystems ended the day at $26.5, down $1.19, or 4.29 percent.