Market Update: Tech Joins Blue Chips in Red at Midday

Techs stocks shed their modest early gains to join the blue chips in negative territory, as profit warnings continue to take a toll on the stock market.

Lately, the Dow Jones Industrial Average was slipping 70 to 10,857, with J.P. Morgan (JPM Quote) supplying the most pressure. But big industrial 3M (MMM Quote) was also tearing 14 points away from the index.

Meanwhile, the tech-laden Nasdaq was falling 66 to 3769. In Nasdaq trading, Qualcomm (QCOM Quote) was bouncing 5.6% on bullish Wall Street comments.

Elsewhere in tech, Goldman Sachs analyst Rick Sherlund eased investors concerns on Microsoft(MSFT Quote). In a research note, Sherlund said that management had no plans to pre-announce the company's quarterly results and that he was comfortable with the firm's first-quarter EPS estimate of a 41 cent profit. Despite the positive comments, Microsoft was falling 1.3%.

In company news, Gillette(G Quote) slipped to a new intraday trading low of $27.81 after it warned that third-quarter results would be only slightly up from the year-ago report. This morning, Edward Jones sliced its rating on the consumer giant to hold from a buy.

AT&T(T Quote) was losing 1.6% after British Telecom(BTY Quote) confirmed that the two companies would negotiate merging some of their business. British Telecom was popping 1.2%

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Sector Watch

After a huge run-up sparked by merger mania in the financial sector, brokers were on the skids with The American Stock Exchange Broker/Dealer Index shedding 3.6%. Lehman Brothers(LEH Quote), which has been tagged as a possible takeover target, was losing 4.3%, while Goldman Sachs (GS Quote) was stumbling 4.4%.

The Philadelphia Semiconductor Index was recovering 1% after trading lower Friday. Micron (MU Quote)was bouncing 5% on an upgrade from Lehman Brothers.

The American Stock Exchange Oil & Gas Index hit a new all-time high of 557.54, with gains from ExxonMobil(XOM Quote) and Chevron(CHV Quote). The group continues to be pushed higher amid rising oil prices. It was lately up 1% to 552.5.

The Philadelphia Stock Exchange Oil Services Index was also off, down 1.8%, with Haliburton(HAL Quote) down fractionally.

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Bonds/Economy

The disinversion of the Treasury yield curve was continuing, with the 30-year Treasury bond's yield now higher than the five-year note's for the first time since January.

It's happening because Treasury prices are mixed. Long-maturity issues are lower in price, causing their yields to rise relative to those of the short-maturity issues, which are little changed.

This continues a trend that emerged last week based on two key assumptions: first, that the Fed is through hiking interest rates, and may even cut the fed funds rate in the next several months if rising energy prices cause economic growth to slow too much. Investors typically push up long-term yields relative to short-term ones when they expect the Fed to take action to stimulate economic growth.

Second, Election Day could spell the end of the policy of using federal government surplus funds to pay down the national debt by buying back mainly long-maturity Treasuries from investors, which inflates their value relative to shorter-term Treasuries.

The benchmark 10-year Treasury note lately was down 5/32 at 99 3/32, making its yield 5.873%.

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