US tech stocks tumble

The Nasdaq tumbled after weak consumer confidence figures

The high-tech Nasdaq plummeted by 4.36% on Tuesday to a new two-year low after a big drop in US consumer confidence and a fall in the number of buyers for new homes sent jitters through the market.

At close of trade, the index was 100.68 points down at 2,207.82, its lowest close since January 1999.

But the Dow was largely unaffected - down just 5.65 points, or 0.05%, to 10,636.88.

Cisco, Oracle, Gateway, IBM, Hewlett Packard and Compaq were among a slew of companies which saw a sharp drop in their share price.

One of the biggest losers Cisco fell $2.06 to $24, a two-year low.

JDS Uniphase, the world's number one supplier of fibre-optic components, tumbled $4.81 to $27.81.

Analysts started selling shares after new figures showed that US consumer confidence had fallen for the fifth consecutive month to its lowest level since June 1996.

Consumer confidence weak

The Conference Board, which measures the US public's optimism about the economy, reported that its consumer confidence index fell by nine points to 106.8 from a revised 115.7 in January.

Economists polled by the news agency Reuters had forecast the index would fall to 109.6.

The report sparked fears that consumer spending, one of the main engines of economic growth, was flagging.

Consumer spending makes up about two-thirds of economic output.

Sales of new homes fall

Meanwhile, a separate report on US housing on Tuesday also suggested that the economy could be in trouble.

Buyers for new homes plunged 10.9% to a 921,000 on an annual basis in January. This is the lowest level in 11 years, even though mortgage rates are falling.

Hopes of a further cut in interest rates by the Fed this week were dampened on Tuesday by comments from one of the US central bank's officials.

Fed vice chairman Roger Ferguson said there were mixed signals on the economy, but commented that consumer spending was holding up well, despite the drop in consumer confidence.

"How these apparently conflicting signals will be resolved going forward is not at all apparent from today's vantage point, and will bear close scrutiny," he said.