US STOCKS-Techs advance after recent drop; S&P 500 flat

(Updates to midmorning)

By Ellis Mnyandu

NEW YORK, Feb 8 (Reuters) - Technology shares advanced on Friday as optimism about valuations fueled buying in the downtrodden sector, but recession worries kept the blue-chip Dow industrials and broad S&P 500 stock gauges little changed.

Shares of Apple Inc (AAPL.O: Quote, Profile, Research), maker of the iPod and iPhone, led the Nasdaq's advancers, with a gain of 3 percent to $124.83. Microsoft Corp (MSFT.O: Quote, Profile, Research), a Dow component, climbed more than 2 percent.

Earlier this week technology stocks took a heavy blow as data pointing to contraction in the vast U.S. services sector and comments about slowing orders from network equipment maker Cisco Systems Inc (CSCO.O: Quote, Profile, Research) unnerved investors.

"Tech was very oversold and at its lowest extreme, so we expected it to bounce," said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut.

"The Nasdaq is (more than) 10 percent below its 50-day moving average, so it's not surprising to see a bounce."

The Dow Jones industrial average .DJI was down 23.00 points, or 0.19 percent, at 12,224.00. The Standard & Poor's 500 Index .SPX was down 1.44 points, or 0.11 percent, at 1,335.47. The Nasdaq Composite Index .IXIC was up 14.25 points, or 0.62 percent, at 2,307.28.

Amazon.com Inc (AMZN.O: Quote, Profile, Research) rose 3.2 percent to $73.20 on the Nasdaq after the Internet retailer's board authorized the repurchase of up to $1 billion of the company's common stock over the next two years. For details, see [ID:nN08461651].