Technology stocks fell yesterday, pushing the Nasdaq composite index down more than 3 per cent, after a big Wall Street house cropped its earnings outlook for network computer maker Sun Microsystems and data storage firm EMC. .

Blue-chips, however, scraped out gains as investors hunted for companies, like drug giant Merck and cigarette maker Philip Morris,[ BO] with more predictable earnings growth amid the nation's economic downturn.

"Investors use the opportunity of an analyst downgrade" to dump shares, said Mr Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $40 billion. "There's a fear that pre-announcements may bring even more negativism and a less-than-positive outlook for the shorter term."