Watch out for falling stocks!

For the seventh straight session, the

Nasdaq Composite Index plummeted -- this afternoon hitting its lowest level since March 23, 1999 -- amid serious concerns about corporate profits in the technology sector.

The

Dow Jones Industrial Average, meantime, plunged over 250 points on the heels of yesterday's

Federal Reserve decision to leave interest rates unchanged, but to adopt an easing bias.

Last night,

Foundry Networks

(FDRY)

, which makes Internet networking products, cautioned that it would miss its previous earnings expectations, due a shift in spending on communication infrastructure. (

TheStreet.com

discussed Foundry's announcement in a separate

story.)

Foundry's warning set off alarm bells among owners of networking equipment stocks: At last look,

Cisco

(CSCO) - Get Report

and

Juniper Networks

(JNPR) - Get Report

had each decreased more than 12%.

Extreme Networks

(EXTR) - Get Report

, a close rival to Foundry, lost 57.6% to $13.

As a result, analysts from

ABN Amro

,

Robertson Stephens

,

SG Cowen

and

Merrill Lynch

passed negative notes and downgrades Foundry's way.

But Foundry was not the only target of Wall Street analysts today. This morning, Merrill Lynch cut its ratings on

Hewlett-Packard

(HWP)

, Cisco and

IBM

(IBM) - Get Report

to near-term neutral from accumulate. The firm said that it was not only troubled about the slowing technology sector, but also was quite concerned with the amount of money being spent on information technology. Slower corporate spending on IT would wreak havoc on the earnings picture at nearly every technology company. H-P was down 2.8%, and IBM was lower by 4.6%.

Another Nasdaq stock,

Manugistics

(MANU) - Get Report

, which licenses and supports software products, reported earnings that -- believe it or not --

beat

Wall Street's forecasts. But in recent trading, Manugistics was down 3%.

Shares of

Siebel Systems

(SEBL)

had recovered lost territory earlier today, after a note from

Credit Suisse First Boston

that questioned the company's growth knocked the wind out of its sails yesterday. But Siebel ended in the red again, down $3.56, or 5.6%, to $59.81.

Over on the Dow front, drug stocks

Merck

(MRK) - Get Report

, up 2.1%, and

Johnson & Johnson

(JNJ) - Get Report

, ahead 1.5%, were two of the index's points of light in late-day trading.

Also,

Big Boarder athletic shoe and apparel maker

Nike

(NKE) - Get Report

was up 3.3% after it reported second-quarter earnings in line with estimates.

Back to top

Sector Watch

Energy-related sectors were down in the dumps today as energy prices slid off their highs. The

American Stock Exchange Oil Index

was 2.3% lower and the

Philadelphia Stock Exchange Oil Service Index

was off 3.8%.

Transportation stocks suffered because of concerns that oil prices were still too high, despite their recent slide. The

Dow Jones Transportation Average

was dropping 1.7%, while the

American Stock Exchange Airline Index

slid 1.8%.

FedEx

(FDX) - Get Report

started the concern after posting second-quarter earnings in line with estimates. That was great news, but it was tempered by the transport saying its fuel expenses were $78 million higher than in the year-ago period, and that

includes

the affects of hedging to lock in low prices.

Tech-related sectors were all lower, including the

Philadelphia Stock Exchange Semiconductor Index

, down 6.5%, and the

Morgan Stanley High-Tech 35

, down 7.3%. The

Philadelphia Stock Exchange Computer Box Maker Index

was down 5.3% thanks to the aforementioned Merrill note.

TheStreet.com E-Commerce Index

was getting slaughtered, plummeting 9.8%.

BroadVision

(BVSN) - Get Report

,

eBay

(EBAY) - Get Report

and

Ticketmaster Online-CitySearch

(TMCS)

were among the hardest hit there.

Back to top

Bonds/Economy

Treasury note and bond prices were sharply higher as investors worried that yesterday's decision by the

Fed to leave interest rates unchanged will further slow the economy. That possibility is weighing on stock prices, which helps the bond market.

The benchmark 10-year

Treasury note lately was up 1 4/32 to 105 10/32, lowering its yield to 5.047%.

Bond prices were rising despite signs of strength in the housing sector of the economy.

Housing starts

(

definition |

chart |

source

) rose more than expected in November, to 1.562 million from 1.528 million in October. Economists polled by

Reuters

had forecast a rate of 1.536 million.

In other economic news, the weekly

Mortgage Applications Survey

(

definition |

chart |

source

) detected an increase in refinancing and a decrease in new mortgage activity as mortgage interest rates fell to new lows for the year. The Refinancing Index rose to 777.2, the highest since May 1999. The Purchase Index fell to 302.2.

Back to top