Sector Watch: Tech, Financials Turn Lower After Rate Cut

Several sectors took today's announcement of a 50 basis-point cut to short-term interest rates hard, while others barely flinched.

Initially, the Philadelphia Stock Exchange/KBW Bank Index fell hard on the news, but soon backtracked and lately was off only 1.3%. Its interest-rate-sensitive components were mixed.

But not all financials reacted so badly to the news. The American Stock Exchange Broker/Dealer Index managed to stay above water for the first hour after the announcement, but the sector had lately turned down and was recently off by 1.6%

Earlier today, Goldman Sachs(GS) reported first-quarter earnings that beat estimates. The good news helped keep the sector on a roll that started yesterday when Lehman Brothers upgraded Merrill Lynch(MER), Goldman and Morgan Stanley Dean Witter(MWD). Late last week, Merrill raised ratings on Goldman and Legg Mason(LM).

Meantime, the news of the Fed's half-point cut did nothing to help tech. Semiconductor stocks and the sectors that manufacture the products that use chips -- like computer hardware makers and telecoms -- were getting socked in the aftermath.

The Philadelphia Stock Exchange Semiconductor Index was falling 3.3%, while the Philadelphia Stock Exchange Computer Box Maker Index was sliding 1.9% and the Nasdaq Telecommunications Index was tumbling 3%.

Although the Morgan Stanley Cyclical Index was off 0.5%, paper which is considered a cyclical, was on the rise. The Philadelphia Stock Exchange Forest & Paper Products Index was jumping 2.6%.