Market Update: Tech Helping Nasdaq's Afternoon Delight, Dow Still in the Dumps

The Nasdaq shrugged off profit warnings to jump into rally mode. But the blue-chips were still suffering from a stronger dollar and rising raw material prices, as investors remained concerned about how they will dent the companies' bottom line.

Lately, the Nasdaq was bouncing 87 to 3814, with Intel(INTC Quote - Cramer on INTC - Stock Picks) climbing almost 6%, after Bear Stearns reiterated its strong buy rating on the semiconductor company.

The Philadelphia Stock Exchange Semiconductor Index, which has slipped 17.5% since the start of September, snapped back 5.8%.

Meanwhile, the Dow Jones Industrial Average was off its sessions lows but was still in the red, down 22 to 10,786, with losses from big cyclical names like Alcoa(AA Quote - Cramer on AA - Stock Picks), which was sliding 4.1%, countering techs strength. The aluminum maker said its third-quarter earnings would miss analyst expectations due to higher energy costs.

The Morgan Stanley Dean Witter Cyclical Index was off almost 1%, hitting a new intraday trading low of 450.32.

Ingersoll-Rand (IR Quote - Cramer on IR - Stock Picks) was also on the downside, slipping almost 10%, on news that its third-quarter and fiscal-2000 results would be hurt by the weak euro and slower demand.

Elsewhere, the broad S&P 500 was climbing 9 to 1454, while the small-cap Russell 2000 was falling back fractionally.

In other company news, financials were bouncing back, after Goldman Sachs(GS Quote - Cramer on GS - Stock Picks) reported better-than-expected third-quarter earnings. The American Stock Exchange Broker/Dealer Index was up 1.6% to 654.06, after falling from its recent all-time high level of 708.76. J.P. Morgan's(JPM Quote - Cramer on JPM - Stock Picks) combination with Chase Manhattan(CMB Quote - Cramer on CMB - Stock Picks) quelled merger speculation, which sent the index soaring more than 15% in three weeks.

Sector Watch

The American Stock Exchange Oil & Gas Index was losing 1.9%, after hitting another all-time high yesterday. Texaco(TX Quote - Cramer on TX - Stock Picks) was falling 2.5%, while British Petroleum (BP Quote - Cramer on BP - Stock Picks) was off almost 2.2%.

The Philadelphia Stock Exchange Oil Service Index was also 1.8% lower, with Haliburton(HAL Quote - Cramer on HAL - Stock Picks) off 1.2%.

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Bonds/Economy

The trend that took hold in the Treasury market in the last week -- long-term yields rising while short-term yields hold steady -- was on hold for today.

In the last several trading sessions, long-term Treasuries have fallen in price so much that the 30-year bond's yield finds itself higher than the 10- and five-year note yields for the first time since January. The shift has been driven mainly by the belief that the Fed is unlikely to hike interest rates again.

But the shift was so sudden and violent that market participants are not surprised to see it pause for a day. After all, anyone who has simultaneously owned short-term Treasuries and been short long-term Treasuries over the last week was sitting on a fat profit, and could reasonably have been expected to close out those positions by selling the short-term issues and buying back the long-term ones.

The benchmark 10-year Treasury note lately was up 2/32 at 99 5/32, yielding 5.863%.

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