Wall Street: Thursday close

WEDNESDAY'S 'moonshot' rally lost altitude, dropping the tech-heavy Nasdaq to its lowest levels since October. The Dow Jones Industrial Average, boosted by a late rally of nearly 200 points in the prior session, descended 106.49 points or 1.07% to 9,834.68. The Nasdaq Index dropped 59.33 points or 3.34% to 1,716.24, its fourth loss in the past five days.

'The market, particularly the Dow, had this tremendous moonshot yesterday, and we need to be shown that this wasn't just a short-covering rally,' said Larry Wachtel, market strategist at Prudential Securities. But investors seemed to be finding it difficult to support the case that something profound had emerged during the last hour of trading on Wednesday.

This was certainly the case with the tech sector. A note from Banc of America Securities questioned the widely held view that demand for tech products was in the early stages of a snapback. Semiconductor maker Intel, specifically mentioned in that note, shed $1.96 or 6.2% to $29.48. Banc of America Securities said that a survey of chip buyers showed that demand had started to weaken in late January and order strength was deteriorating into March and beyond. Earnings estimates were too high for Intel, the broker said. Microsoft weakened $1.85 cents or 3% to $58.05.

Optical network company Ciena dipped $1.10 or 12.6% to $7.60 after it warned that it would not meet its forecasts due to slumping demand for its wares. Weakness ran through the telecom sector and suppliers to the industry. Telecom BellSouth stumbled $2.50 or 6.2% to $37.95 as it said it was falling short of expectations partly due to tough times for its operations in South America. WorldCom stood out with a gain of 14 cents or 2.1% to $6.72 after it said it would receive $930m. from News Corp. to unwind a partnership between the two. News Corp. eased $1.73 or 6.5% to $25.01.

Accounting and disclosure questions continued to dog selected companies. Network gear maker Cisco Systems slumped $1.58 or 9.5% to $15.1 on a newspaper report that some of its executives had participated in side deals with their own company. Insurance giant AIG slid $2.68 or 3.6% to $71.04 as the

Securities and Exchange Commission asked it for details of partnerships with PNC Financial, already under an accounting cloud. PNC shares sold off $1.31 or 2.4% to $54.49. Computer Associates, the business software maker knocked on Wednesday on reports it was the target of an official investigation, retreated $2.01 or 9.6% to $18.90. IBM lost another $2.93 or 3% to $96.38.

MGM, the movie company which produced the James Bond and Pink Panther series, gave up 63 cents or 3.5% to $17.16 on reports an effort to sell the company for $7bn. had ended. AOL Time Warner, down 5% on Wednesday after a broker downgrade, fell another $1.20 or 5% to $23.

Trading came against a backdrop of mixed economic signals. The Conference Board's index of leading economic indicators jumped 0.6% in January, its fourth straight gain. 'The strong signal from the indicators is that the recession is ending and that the recovery could be more vigorous than earlier anticipated,' said Ken Goldstein, an economist at the Board. But weekly jobless claims rose more than expected, up 10,000 to 383,000.