Oracle's weaker-than-expected revenue and cautious comments from its chief financial officer knocked the software maker's shares down 7.2 per cent. That triggered a widespread sell-off of technology shares, including Apple, which slid 3.3 per cent.

Rumours that Lehman Brothers Holdings could suffer a fate similar to the near collapse of Bear Stearns pushed Lehman's shares down 8.9 per cent. Lehman called the rumours 'totally unfounded.' A 3.1 per cent slide in Google's shares after Lehman slashed its price target on the Web search leader added to anxieties about tech stocks.

'Oracle came out with results that were a little light and their forward guidance was a little cautious,' said Mr James Rosenthal, head trader at Punk Ziegel & Co. in New York.

'Oracle is a very large company. It sells into a lot of different spaces, and if they are a little cautious and companies are waiting to make spending decisions, that will affect all businesses going forward for the next three to six months, and that's why techs are weak today.'

The Dow Jones industrial average slid 120.40 points, or 0.97 per cent, to end at 12,302.46. The Standard & Poor's 500 Index fell 15.37 points, or 1.15 per cent, to finish at 1,325.76. The Nasdaq Composite Index slumped 43.53 points, or 1.87 per cent, to close at 2,280.83.

After the closing bell, shares of Bear Stearns, the troubled Wall Street bank in the process of being acquired by JPMorgan Chase & Co, fell 5.2 per cent to US$10.65 (S$14.70) after news that Chairman James Cayne and his wife had sold US$61.3 million worth of the bank's stock.

Bear Stearns' stock had ended regular trading at US$11.23, up 18 cents, or 0.02 per cent, on the NYSE. Earlier this week, JPMorgan increased its offer for Bear fivefold to US$10 a share.

Boeing and Oracle dive
During the regular session, shares of Boeing Co were the top drag on the Dow. Boeing fell 2.7 per cent to close at US$74.22 on the NYSE after Citigroup cut its price target on the stock to US$68 from US$78.

Trading was volatile and indexes gyrated widely until the last hour of trading when financial stocks tacked on more losses, causing the market to end right at its session lows.

Oracle shares dropped to US$19.43 on the Nasdaq, while shares of Apple, the computer and iPod maker, tumbled to US$140.25.

Shares of BlackBerry devices maker Research In Motion Ltd slumped 5.1 per cent to US$112.15 on Nasdaq.

Google shares ended down 3.1 per cent at US$444.08 after Lehman Brothers cuts its price target by 10 per cent on the stock to US$580. Chip maker Intel Corp was another high-profile tech casualty, along with technology services company International Business Machines Corp.

Intel shares fell 3.5 per cent to close at US$21.09 on Nasdaq and IBM shares slid 1.2 per cent to finish at US$115.52 on the NYSE. IBM ranked second among the Dow's biggest decliners.

Shares of Lehman Brothers, the fourth-largest US investment bank, closed at US$38.71, down US$3.78 on the NYSE. Earlier, Lehman's stock fell as low as US$37.14.

Merrill Lynch shares fell 5.7 per cent to US$41.90 after Mr Sanford C. Bernstein, a brokerage, said the bank's first-quarter results would likely be the weakest among major US securities firms.

Separately, an influential bank analyst, Ms Meredith Whitney at Oppenheimer & Co, said she expected Merrill to lose US$3 a share in the first quarter, and tripled her projected write-down for Merrill to US$6 billion from US$2 billion.

Among the financial sector's other major decliners were Bank of America Corp , the No. 2 US bank by assets, down 3 per cent at US$38.64, and JPMorgan Chase & Co , the No. 3 US bank, down 2.8 per cent at US$42.86.

Before Wall Street's opening bell, the Commerce Department said US corporate profits fell 3.3 per cent in the fourth quarter in a report that also confirmed the US economy, measured by gross domestic product, grew at a meager annual pace of 0.6 per cent in the same period. GDP is the measure of all goods and services produced within US borders.

Trading was extremely light on the New York Stock Exchange, with about 1.43 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.04 billion shares traded, below last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 5 to 3 on both the NYSE and the Nasdaq. -- REUTERS