The Nasdaq composite index lost 124.56 to 4,834, and the Standard & Poor's 500 index slipped 16.13 to 1,507.73. The Dow Jones industrial average lost 89.75 to close at 10,936.10.
The CNET tech index lost 81.65 to close at 3,489.70.
Losers trounced winners, with 86 of the 100 stocks in the index falling, 12 rising and two remaining unchanged.
Of the 18 sectors tracked, e-tailers and semiconductor equipment companies posted the sharpest declines, falling about 5 percent and 4 percent, respectively. Computer distributors were the day's largest gainers, climbing 2 percent.
Intel lost $7 to finish at $135.69. Intel has recently increased its investments in Linux companies.
Microsoft inched up 25 cents to $104.31 as federal judge gave the company more time to negotiate a settlement in its antitrust suit.
The initial public offering of Websense, an Internet surveillance software company, was the biggest percentage gainer on the Nasdaq Stock Market. The shares jumped $29.75, or 165 percent, to $47.75. Volume topped 9.6 million shares.
The IPO of Allos Therapeutics posted a large loss, falling $5, or 27 percent, to $13 on volume of 7.7 million shares. The company priced its initial offering at $18 a share.
Among members of the CNET tech index, eBay posted losses.
The online auctioneer slid $16 to $223.81. The company is closing some member accounts and calling federal officials after receiving more than 150 complaints about fraudulent auctions
Other losers included PMC-Sierra, which fell $15.75 to $215.81, and Ciena, which fell $10.25 to $147.19.
Vitesse Semiconductor rose $8.38 to $104.31. The chipmaker said it will buy Orologic for $50 million and received favorable analyst support.
The Philadelphia semiconductor index fell 44.20, or 3 percent, to 1,261.26, led by chip designer Rambus, which lost $23.25 to close at $322.25.
Start-up networking equipment company Juniper Networks today unveiled a network router that runs four times faster than its current flagship product and faster than competing products offered by Cisco Systems.
Juniper shares rose $30.56, or 11 percent, to $307, and Cisco fell $2.19 to $77.88.
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