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A hotter-than-expected

Consumer Price Index

is going to take the market lower this morning.

The CPI gained 0.7% overall, above expectations for a 0.5% increase as indicated by Reuters consensus estimate poll. The core rate, which excludes food and energy prices, was 0.4%, double the expected 0.2% jump.

Stock futures immediately began to slide. At 9:05 a.m. EDT, the S&P 500 futures were down 9.5 points, about 8 points below fair value and indicating an early selloff. The Nasdaq futures were down 48.6 points, also a negative indication for tech.

"The Nasdaq is going to test lows again and should break through the 3649 low this morning," said Jim Volk, co-director of institutional trading at

D.A. Davidson

. "We should see continued nervousness and continued margin selling, though there could be some kind of weak bounce today."

Bonds initially sold off on the news but have since recovered. The 10-year note was lately up 1/32 to 104 7/32, putting the yield at 5.926%.

The hotter-than-expected number only fans the market's anxiety after

Fed

boss

Alan Greenspan

suggested yesterday that new rate hikes could be expected.

The Nasdaq doesn't look like it's geared up for any boost from last night's earnings in the early going. The data deflated sentiment boosted by earnings released after the close yesterday. One of the Nasdaq's biggest stocks,

Sun Microsystems

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(SUNW) - Get Sunworks, Inc. Report

,

reported better-than-expected earnings, while

Gateway

(GTW)

reported earnings in line with expectations. Sun Microsystems' earnings are the kind the market will likely need if investors are to regain confidence in Nasdaq valuations.

Earnings on slate for today include several mid-cap companies traded on the NYSE. We'll probably have to wait until next week for the number of first-quarter reports coming in to grow sufficiently diverting. The

earnings slate is thinner than yesterday, with

Tribune

(TRB)

,

Unicom

(UCM)

, and

Boise Cascade

(BCC) - Get Boise Cascade Co. Report

the biggest names on the list.

Hertz

(HRZ)

is already out with numbers beating estimates.

European markets were falling on the continuing Nasdaq slide. In Paris, the

CAC

was down 61.77 to 6202.6, while Frankfurt's

Xetra Dax

was off 51.12 to 7397.94 and London's

FTSE

had fallen 106.3 to 6250.7.

The euro was sitting at $0.9539.

Asian markets

slipped overnight on the continuing Nasdaq bashing, but losses were still milder than on Wall Street. In Tokyo, the

Nikkei

index fell 91.74 points to 20,434.68 as investors sought safety in cheaper biotech, food and beverage stocks. Meanwhile, Hong Kong's

Hang Seng

index fell 209.80, or 1.3%, to 16,142.76, also dragged down by tensions between China and Taiwan.

South Korea's

Kospi

index careened down 36.12, or 4.3%, to 800.89 as investors tried to play catch-up after the market's holiday Thursday. Market sentiment was also shaken after President

Kim Dae Jung's

Millennium Democratic Party failed to take a majority in the Thursday's legislative elections.

The dollar edged slightly higher against the yen, to around 105.83. Currency dealers were in no hurry to post new positions since the

Group of Seven

industrialized nations are meeting Saturday. The greenback has managed to hold on to that strength and was lately sitting at 105.36 yen.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.