Market Update: Dow and Nasdaq Stumble - TheStreet

Market Update: Dow and Nasdaq Stumble

Chip sector falls as two companies warn. Retailers, Internet and networkers also slide.
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()Updated from 10:53 a.m. EDT)

Weighed down by concerns about earnings, the major indices paddled lower this morning.

Two chip companies warned this morning. And on Friday,

Juniper Networks

(JNPR) - Get Report

said it would miss second-quarter revenue estimates, putting a curb on investor enthusiasm about technology investments.

"The market is having a delayed reaction to Friday's news," said Peter Coolidge, managing director of trading at

Brean Murray Foster Securities

. "Maybe investors got ahead of themselves by pricing in an optimistic scenario for the warnings season. And now, they're hedging their bets."

Stocks sold off on Friday and continued lower this morning. The

Nasdaq Composite was off 55 points, or 2.5%, to 2160. The

Dow Jones Industrial Average was lately down 80 to 10,898, weakened by both technology and defensive stocks.

Intel

(INTC) - Get Report

, for example, was dropping 3.1% to $29.72, while

Merck

(MRK) - Get Report

was slipping 2.7% to $72.19.

The broader-market

S&P 500 was shedding 12 points to 1253.

Among sectors of the market, networking, drug, cyclical, retail, and Internet stocks were falling. The

Philadelphia Stock Exchange Semiconductor Index

was latley off 3.6%.

Anadigics

(ANAD)

this morning said its second-quarter loss would be bigger than analysts were anticipating. And

Varian Semiconductor

(VSEA)

said its third-quarter revenue would be lower than expected.

Oil and utility stocks were rising, but only modestly. There were no major pieces of corporate earnings or economic news to drive the market.

Buoyed for most of last week by optimism about corporate earnings, the major indices turned around Friday and racked up losses. "The Juniper news more than upset the positive effect of Intel's statement," Coolidge said. Last Thursday, chipmaker Intel confirmed it was on track to meet earnings and revenue estimates for its current quarter. Other companies with good news on the earnings front have included telecom equipment provider

Lucent

(LU)

and communications-chip maker

Xilinx

(XLNX) - Get Report

.

But Juniper has plenty of company in the confessions department. Among the companies to warn:

Sun Microsystems

(SUNW) - Get Report

,

Hewlett-Packard

(HWP)

,

J.P. Morgan Chase

(JPM) - Get Report

and

Handspring

(HAND)

.

Electronic manufacturing service companies were trading lower today after a downgrade from

Merrill Lynch

. The firm cut its recommendation on

Celestica

(CLS) - Get Report

,

EMS

(EMS)

,

Jabil Circuits

(JBL) - Get Report

,

Sanmina

(SANM) - Get Report

and

Solectron

(SLR)

. Each of those stocks was lately off more than 5%.

Shares of

RealNetworks

(RNWK) - Get Report

had been gaining after the company announced a plan to incorporate its video broadcasting technology into

Cisco's

(CSCO) - Get Report

content networking product line. But RealNetworks was lately off 1.7% to $11.89.

Stocks tumbled in major Asian markets overnight. Tokyo's

Nikkei 225

closed down 203.74 points, or 1.52%, to 13,226.48 as investors fretted over weak data on the nation's gross domestic product growth. GDP declined 0.2% from the previous quarter; economists had expected a 0.2% rise. The Nikkei is now trading just above an eight-week low, hit last Tuesday. Hong Kong's

Hang Seng

closed down 133.40, or 0.97%, to 13,675.49.

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