Technology stocks continued to waver in afternoon trading Thursday as the sector got caught up in the broader market's marginal losses, fueled by rising prices and China and ever-present concerns about the U.S. economy.

The market's uneasiness helped pull the Nasdaq Composite Index (RIXF) down 2 points to 2,355, while the Philadelphia Semiconductor Index (SOX) and the Morgan Stanley High Tech 35 Index (MSH) also retreated.

The latest economic data from China showed an increase in the country's inflation rate, which added to fears that the mainland economy may be growing too fast.

There also was concern about the state of the U.S. economy, with the number of applicants making initial filings for jobless benefits in the United States falling by 6,000 last week, fewer than what many economic watchers had expected.

Undercutting the chip sector, J.P. Morgan analyst Christopher Danely wrote in a research note that he believed the overall outlook for semiconductor firms is good, but that some cracks are beginning to appear in the sector.

Danely said he was concerned about signs that demand for personal computers is beginning to soften, along with signs of a rise in semiconductor inventories.

Among chip stocks, Intel Corp. (INTC), Advanced Micro Devices Inc. (AMD) and Micron Technology Inc. (MU) were all in the red.

Other tech shares on the decline included Apple Inc. (AAPL), Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), Seagate Technology (STX) and Yahoo Inc. (YHOO)

Google Inc. (GOOG), however, rose $4.94 to $581.39.

Broadpoint AmTech analyst Benjamin Schachter told clients in a note that Google's gross margins have the ability to "rise substantially" through 2010 and 2011, with the new Google-designed Nexus One smartphone qualifying as a "wild card" for the company's earnings.

Video-game retailer GameStop Corp. (GME) also rose, adding 95 cents a share, or more than 5%, to reach $19.25

Small gains also came from Adobe Systems Inc. (ADBE), International Business Machines Corp. (IBM) and Microsoft Corp. (MSFT)

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