The market's tone was decidedly improving in afternoon trading as major indices bounced off their Intel-engendered (INTC) - Get Intel Corporation (INTC) Report lows.


Dow Jones Industrial Average was lately down 27 to 10,738 while the tech-heavy

Nasdaq Composite Index remained under selling pressure. It was lately down 81 to 3748. Not great, but a decided improvement over its early intraday point loss of 214. Intel is shaving 75 points from the Dow, but the blue-chip average otherwise looks fairly good.

Intel itself was lately down 20.6% to $48.81 after hitting a low of $46.50 in earlier trading. A whopping 229 million shares have changing hands, a record volume for a single issue on the Nasdaq. The company said last night it expects third-quarter revenue to rise 3% to 5% from the second quarter's $8.3 billion. The Santa Clara, Calif., chip maker said third-quarter gross margin would also fall below estimates, at 62% vs. the previous 63% to 64% guidance.

A slew of brokerage firms cut Intel's ratings and earnings per share estimates this morning, including

Merrill Lynch


Lehman Brothers


Deutsche Banc Alex. Brown


Credit Suisse First Boston


Salomon Smith Barney


Some think the bad news on the Nasdaq is really Intel-specific, that it won't spread to the rest of tech, and that, in fact, the market is oversold enough for a nice rally.

"This is the big shoe everyone has been waiting for to drop. With the fear hanging over the market for the last 2 to 3 weeks, this creates a climactic situation," said Tony Dwyer, chief market strategist at

Kirlin Holdings

. "We'll have back-and-forth action for a few days but now we have hit a bottom. What else could hurt tech?"

Brian Finnerty, head of trading at

C.E. Unterberg Towbin

, expressed a similar viewpoint. "The market is acting very well

considering the news. "There will be a lot of negative press, and we might get another bout of selling after the weekend but it's nowhere near" what some people had expected, he said, noting a bounce in



and some fiber-optic stocks. Finnerty said the latest Intel news is something like an "exclamation point" to a market that's been jittery all year. "I guess it shows that the world isn't over."

This earnings preannouncement season -- the time ahead of earnings reports when companies warn they might miss estimates -- has seen a euro in the dumps, record highs in oil prices and a slowing economy, all of which have had investors on edge. In the past few weeks, Wall Street has severely punished the share prices of several companies that have issued warnings.

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The Central Banks in Europe, the U.S. and Japan have joined together to buy euros in an attempt to break the euro's fall. This if the first time since 1995 that the U.S., Japan and Europe have joined together to intervene on behalf of a currency. The euro soared up to 4% against the dollar, recently trading at $0.8880.

And crude-oil futures continued to trade lower today. November crude-oil futures were lately trading at $33.30 a barrel, after falling $1.24 to $34 yesterday.

Dwyer noted the intervention in the euro and said he thinks energy prices have peaked. "All this negative sentiment sets the stage for a rally," he asserts.

When not watching Intel today, investors will be listening for words of caution or optimism from a slew of heavy-hitters in several sectors that are

presenting at the

Banc of America Securities Investment Conference

today in San Francisco.

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Sector Watch

Numerous tech sectors were coming under pressure in the wake of Intel's news. Meanwhile, one or two sectors were benefiting from the rush out of high tech. Drug stocks in particular were getting some good medicine as gains in

Bristol-Myers Squibb

(BMY) - Get Bristol-Myers Squibb Company Report


American Home Products


sent the

American Stock Exchange Pharmaceutical Index

up 3%.


Philadelphia Stock Exchange Semiconductor Index

was still on a slide, lately down 8%. The

Philadelphia Stock Exchange Computer Box Maker Index

was off 3.8%.

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The bond market is benefiting from the weakness in stocks, which adds to its conviction that the economy will continue to slow, keeping the

Fed from hiking interest rates any further. It is also benefiting from thecontinued slide in oil prices, which had reached 10-year highs earlier this week.

This morning's coordinated intervention by Europe, the U.S. and Japan to halt the euro's slide has mixed implications for Treasuries. On the one hand it has given a lift to European government bond prices, making Treasuries look cheap in comparison. On the other hand, the countries that participated in the intervention are expected to sell short-term Treasuries to finance their purchases of euros when the transaction settles. Short-term Treasuries ordinarily benefit from flight-to-quality sentiment when the stock market falls steeply, and they would be in this case, too, were it not for the intervention, said Tony Crescenzi, CEO of

The 10-year Treasury note lately was down 4/32 to 99 11/32 pushing its yield up to 5.83%.

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