Market Update: Nasdaq Ends Strong, Dow Finishes Weak

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

The Nasdaq closed up 139 to 3866, with Intel(INTC Quote - Cramer on INTC - Stock Picks) ending up 8.2%, after bullish comments from Bear Stearns and an upgrade from Banc of America.

The Philadelphia Stock Exchange Semiconductor Index, which has slipped 17.5% since the start of September, snapped back 8%.

Meanwhile, the Dow Jones Industrial Average was off its sessions lows, but still closed in the red, down 19 to 10,789, with losses from big cyclical names like Alcoa(AA Quote - Cramer on AA - Stock Picks), which slid 5.1%, countering techs' strength. The aluminum-maker said its third-quarter earnings would miss analyst expectations because of higher energy costs.

The Morgan Stanley Dean Witter Cyclical Index ended off 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 climbed 15.4 to 1460, while the small-cap Russell 2000 ended the day up 7 to 523.

In other company news, financials bounced 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 ended up 2.6% to 650.1, 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 had sent the index soaring more than 15% in three weeks.

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Sector Watch

The American Stock Exchange Oil & Gas Index lost 2.7% after hitting another all-time high yesterday. Texaco(TX Quote - Cramer on TX - Stock Picks) fell 3%, while British Petroleum (BP Quote - Cramer on BP - Stock Picks) was off 2.8%.

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

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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 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 flat at 99 6/32, yielding 5.858%.

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