Market Update: Nasdaq Selling Still the Rage; Dow Ekes Out Gains

The market floundered at the open this morning as investors timidly nibbled selectively at Old Economy and tech stocks.

The Dow was lately adding grudgingly to Monday's gains, while the Nasdaq was following through on its late-in-the-day Monday selling.

Major Indices INDEX CHANGE % VALUE Dow 30.71 0.29% 10,576.78 S&P 500 0.82 -0.06% 1348.15 Nasdaq 59.07 -2.05% 2821.42 Russell 2000 5.16 -1.09% 466.54 TSC Internet 19.41 -4.59% 403.49 NOTE CHANGE PRICE YIELD 10-Year Treasury 6/32 101 2/32 5.605% Market data as of: 10:55 AM ET, Tue Nov 28 2000

But who knows where the indices will end up? Uncertainty over future earnings growth and continuing anxiety over the election outcome hang like a deep sea fog over this market, clouding its direction for what remains of the year.

Another ugly call on tech stocks this morning wasn't any good for tech sentiment. Especially after the Nasdaq slipped so dramatically off its early day rally yesterday afternoon. Still, the analyst call hit the small stuff -- electronic-components makers. PC-makers and a few optical equipment makers were managing to eke out some gains.

Merrill Lynch's influential analyst, Jerry Labowitz, slashed numbers and ratings on electronic-components makers Vishay Intertechnology(VSH Quote), AVX(AVX Quote) and Kemet(KEM Quote). Vishay was lately falling 16.4%. AVX was whacked down 16.5%. And Kemet, which was halted in early trading, was off 21.8%.

Overall, the semiconductors continued to fall today after getting slammed yesterday by a series of lowered ratings and EPS views. The Philadelphia Stock Exchange Semiconductor Index was recently down 2.3%. Ariba(ARBA Quote), which was downgraded by Wit Soundview yesterday, was off 3.8% and Altera(ALTR Quote) which saw its earnings outlook lowered by Lehman Brothers, was off 1.2%. But Xilinx(XLNX Quote), which was also lowered by Lehman, was rebounding 2.4%.

And there was a smattering of buying in a few tech bellwethers. Networker Cisco(CSCO Quote), PC-maker IBM(IBM Quote) and software company Oracle(ORCL Quote) were keeping their heads just above water. IBM was 1.3% higher, while Cisco was up 1.4% and Oracle was lately flat.

Over on the NYSE, telecom-equipment maker Lucent(LU Quote), General Electric(GE Quote) and AT&T(T Quote) were getting quite a bit of investor attention; they were the most actively traded stocks on the exchange. Lucent continued to fall after the company disappointed investors again early last week. Lucent said it had incorrectly reported fourth-quarter results and could no longer confirm its first-quarter guidance.

General Electric was rising after it named Jeffrey Immelt to succeed Chairman and CEO Jack Welch when he steps aside at the end of 2001. And AT&T was trading on the news that it had named David Dorman its new president. Dorman was previously the CEO of Concert, a joint venture between AT&T and British Telecommunications. GE was up 0.9% and AT&T was falling 2.3%.

The Dow was just barely afloat, as powerful losses in Microsoft(MSFT Quote) and Eastman Kodak(EK Quote) weighed in heavily. Microsoft was off 4.4% to $67.56. Kodak continued a renewed slope downward over the past month, off 5.4% to $41.56.

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Sector Watch

Yesterday's rally in retail was pretty short-lived. The retailers rallied on news that retail sales exceeded expectations after the Thanksgiving holiday. Analysts watch this time closely for clues about how spending will go throughout the holiday season.

But market observers think most of that strength is due to big discounts, which aren't good for retailers in the long run. Some are recommending that investors sell off of yesterday's rally, and investors are listening. Merrill Lynch this morning cut Gap(GPS Quote) to intermediate-term accumulate from buy. It was lately off 5.3%. Other retailers were also lower; the S&P Retail Index was falling 1.1%.

Retail stocks have been falling on fears that the slowing economy and weaker stock prices in general would keep shopper's wallets closed during the most important time of the year for retail sales.

Defensive stocks were getting some juice from tech selling, with drugs, tobacco, energy and paper stocks seeing a bit of green light.

Financials were also higher after Goldman Sachs raised financial giant Lehman Brothers(LEH Quote) to market outperformer from market performer. The financials have been under pressure lately on credit risk concerns.

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Bonds/Economy

Bond prices were rising this morning following the cooler-than-expected durable goods orders number. The benchmark 10-year Treasury note was up 6/32 at 101 2/32, yielding 5.605%.

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