Semiconductor shares weighed on the broader stock market, which was already buffeted by higher oil prices Monday.
An analyst cut his rating on the semiconductor sector to "Market Weight" from "Overweight," citing its slowing growth rate, sending many of the group's shares sharply lower.
The Philadelphia Semiconductor Index fell 12.47 points, or 2.7 percent, to 447.35 on Monday, its lowest close in two weeks. The drop came after the Semiconductor Industry Association said global sales of chips in January were up 14 percent from a year ago at $25.5 billion.
Wells Fargo analyst David Wong noted that the sector's growth rate was slower than the previous January, when worldwide shipments rose 70 percent from the market bottom in January 2009. For the whole year, shipments rose 32 percent.
"Our sector downgrade is more an indication of a more moderate, though still optimistic view, of the sector rather than any active concern about the chip stocks as a group," Wong wrote in his note.
Chip-making equipment manufacturer Teradyne Inc. was the second-biggest percentage decliner of stocks in the S&P 500, falling $1.02, or 5.4 percent, to close at $17.96 in the regular session Monday. Memory chip maker Micron Technology Inc. fell 61 cents, or 5.2 percent, to close at $11.03 and Applied Materials Inc. fell 77 cents, or 4.6 percent, to close at $15.96.
The Standard & Poor's 500 index fell 11.02 points, or 0.8 percent, to 1,310.13.
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