Wall Street Technology shares close off highs after Fed rate cut

SAN FRANCISCO (AFX) - Prices of technology shares lost most of their earlier gains to close only slightly higher as the euphoria which greeted the Federal Reserve's decision to cut rates by 50 basis points had all but faded 

by the end of the session, dealers said.

	    The Nasdaq composite closed up 3.79 points at 2,085.70 after having rallied over 30 points soon after the Fed's decision was announced.

	    The Nasdaq 100 closed up 2.11 at 1,797.17 while the Philadelphia Semiconductor Index (SOX) was up 1.31 at 0.22. 

	    In the wider market, the DJIA was down 4.36 at 10,872.97 while the S&P 500 index was 0.51 higher at 1,249.43.

	    Earlier, the Fed announced it cut its key federal funds interest rate to 4.0 pct from 4.5 pct, the fifth reduction this year, pushing the rate down to 

its lowest level since April 1994.

	    Of equal importance were the U.S. central bank's accompanying comments, 

which suggested that further rate cuts are on the way.

	    In its statement, the Fed said the economy faces a risk of continued weakness, which investors saw as a clear sign that the bank stands ready to 

cut rates again at its next meeting on June 27. 

	    "People were a little surprised that the Fed held out the prospect of further cuts," said Barry Hyman. 

	    "There had been fears that the rate-cutting cycle was near to its end. But this is certainly going to help consumer confidence and prospects within 

the IT industry."

	    Even so, Hyman said investors will continue to be cautious on the sector over the short term and will be keeping a close eye on key earnings reports from Applied Materials, Hewlett-Packard and Dell -- all due this week.

	    Among the biggest risers were Advanced Micro Devices, which rose 1.94 usd to 29.14, on speculation that the chip group may be winning market share at 

the expense of rival Intel and that it is poised to announce a major order win.

	    Also in chips, Applied Materials closed higher ahead of its results, due after the close.

	    Applied Materials Inc's second-quarter earnings before exceptional items came in at 269.0 mln usd or 32 cents a share, down 41 pct from 459.0 mln usd 

or 53 cents a share a year earlier and missing the First Call/Thomson 

Financial consensus estimate calling for EPS of 33 cents.

	    Its shares were up 0.20 at 49.89.

	    Elsewhere, Lucent, Nortel and Motorola all closed weaker despite news that the three were among those who will share in a 1.46 bln usd mobile 

network contract from China Unicom.

	    Lucent closed down 0.06 at 9.65 while Nortel was 0.35 weaker at 13.40.

	    Motorola was down 0.78 at 14.96 Qualcomm also rose on the news as theinfrastructure will be based on the U.S. group's patented CDMA wireless technology.

	    Qualcomm was up 2.73 at 59.65.

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