Market Update: At Midday, Stocks Barely in Green - TheStreet

The

Dow Jones Industrial Average and

Nasdaq Composite Index, which were both in the red, were showing signs of a retreat of late.

The Dow started off in positive territory, but fell about half an hour after the opening bell, while the Comp held on a little longer. It slid into the red at 10:55 a.m. EDT.

Eastman Kodak

(EK)

kept its lead position as the biggest drag on the Dow, taking about 25 points away from the index. It was followed by

Boeing

(BA) - Get Report

and

Microsoft

(MSFT) - Get Report

, which were both weighing it down 13 and 6 points, respectively.

Boeing, down 3.2% to $63.94, was suffering after it was announced that the European Commission cleared Boeing's plans to buy

Hughes Electronics

(GMH)

. Hughes was lately up slightly, 0.4% to $36.75. Still, Boeing got its daily affirmation in the form of an upgrade in its price target from

SG Cowen

and a raise in its 2000 earnings per share estimate at

Lehman Brothers

.

Hewlett-Packard

(HWP)

and

ExxonMobil

(XOM) - Get Report

were the biggest contributors to the Dow's upside, adding a total of about 25 points.

With all of the

earnings warnings in the past couple weeks, it was nice to get some good news from

3Com

(COMS)

. It reported a far narrower-than-expected loss post-close last night, and got some positive revisions on 2001 loss estimates from

Lehman Brothers

and

Goldman Sachs

. The stock was lately soaring, up 21.1%.

Two of 3Com's primary competitors,

Lucent

(LU)

and

Nortel

(NT)

were falling, down 4.1% and 5.5%.

Also,

Motorola

(MOT)

was lately falling about 5%, on rumors of an earnings shortfall, one trader said.

Meanwhile, the aforementioned Microsoft, along with tech heavyweights

Dell

(DELL) - Get Report

,

eBay

(EBAY) - Get Report

and

Amazon.com,

(AMZN) - Get Report

were all trying to pull down the Comp.

They had some tough competition, though, in

Cisco

(CSCO) - Get Report

,

Intel

(INTC) - Get Report

and

Oracle

(ORCL) - Get Report

, which were all lately on the upside.

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Sector Watch

Semiconductors were making another attempt at a comeback this morning. The sector has been under water of late on concern that chip demand is slowing. The

Philadelphia Stock Exchange Semiconductor Index

was lately up 3.1% to 897.4.

Altera

(ALTR) - Get Report

,

Micron

(MU) - Get Report

and

Xilinx

(XLNX) - Get Report

were providing much of the lift.

Brokerage stocks were slipping slightly, and banks and insurance stocks were down this morning following news of

FleetBoston's

(FBF)

planned acquisition. The

American Stock Exchange Broker/Dealer Index

was down 0.9%, while the

Philadelphia Stock Exchange/KBW Bank Index

was 1% lower and the

S&P Insurance Index

was off 0.3%.

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Bonds/Economy

Bonds are under pressure in part because a

report in today's

Washington Post

says an error in calculating the

Consumer Price Index

(

definition |

chart |

source

) resulted in the key inflation measure being understated. The correction is likely to add 0.1 to 0.3 percentage points to the overall and core inflation rates, the article says.

The

Bureau of Labor Statistics

was to release a written statement addressing the matter at noon today and will hold a briefing at 9:30 a.m. EDT tomorrow.

A higher inflation rate devalues bonds because it erodes the value of the fixed interest payments they make.

The benchmark 10-year Treasury note lately was down 9/32 at 99 10/32, lifting its yield to 5.844%.

Overall CPI inflation was running at a rate of 3.4% in August, while core CPI inflation, which excludes food and energy, was running at 2.5%, nearly a two-year high.

The error was double-counting some of the adjustments statisticians make for quality improvements when they compare the price of certain products from year to year.

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