The major stock market indices stole stealthily higher at today's open, but were lately creeping back towards the flatline as the much-awaited

Federal Reserve interest rate decision approached. That decision will be released this afternoon around 2:15 p.m.

Stocks got a faint buzz from the lower-than-expected

gross domestic product number released before the market opened this morning, which may have reinforced expectations the Fed will cut rates by a half-point today.

Fed fund futures -- often a good predictor of interest-rate action -- were already pricing in more than a 100% chance of a half-point cut to 5.5% today. But fed fund futures are also pricing in a 76% chance that the Fed will slash rates by a further half-point cut to 5% by April 1. The market could now be assuming that the Fed will make another intermeeting cut or act when it next meets on March 20.

The blue-chip

Dow, which enjoyed a three-digit rally yesterday, and the tech-leaning

Nasdaq were both easing higher.

Semiconductors continued to charge higher this morning. The sector has been rallying since the beginning of the year. Networkers were also rising, as were the "been down so long it looks up to me" Internet stocks and PC makers. Drugs and financials were the market's weakest.

Semiconductor king

Intel

(INTC) - Get Intel Corporation (INTC) Report

was up 2.3% to $37.81, one of the Nasdaq's most actively traded stocks.

But investors were rushing to dump chipmaker

Applied Materials

(AMAT) - Get Applied Materials, Inc. Report

this morning, however, another of the most actives. After it warned last night that first quarter earnings would miss forecasts, blaming slowing chip sales, research firms piled on the stock this morning.

Lehman Brothers

lowered its earnings estimates for 2001 and

Goldman Sachs

lowered them for 2001 and 2002. Applied Materials was falling 2.2% to $51.38.

Networking giant

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

was the most popular Nasdaq stock. It continued to recover from recent losses generated by an earnings warning last week from one of its major buyers,

PMC-Sierra

(PMCS)

, and cautious forward-looking statements recently from CEO John Chambers. PMC-Sierra last week halved its forecasts for first quarter earnings on concerns over bulging inventories and sagging demand. PMC-Sierra was up 4.4% and Cisco was up 2.1%.

Software company

Adobe Systems

(ADBE) - Get Adobe Inc. Report

was a big loser after

announcing that an economic slowdown could cap its revenue outlook for the first quarter. Adobe was falling 13%.

Mammoth Internet retailer

Amazon

(AMZN) - Get Amazon.com, Inc. Report

got an initial boost this morning after announcing plans last night to slash 1,300 jobs in an effort to turn a profit for the first time by the fourth quarter 2001. But the online retailer also slashed its revenue-growth guidance and got hit by a slew of downgrades, includingone from

W.R. Hambrecht

. Amazon was lately down 5%.

Pumping up the Dow was oil driller

ExxonMobile

(XOM) - Get Exxon Mobil Corporation Report

, with a weighted 12 points to the Dow's gains. ExxonMobile was rising partly on the back of a report from

Prudential

, which this morning upgraded the major oil companies. Prudential raised Exxon to accumulate from hold. Lehman Brothers also kicked up its rating on the stock to strong buy from neutral. ExxonMobile was up 2.3%.

Also carrying the weight of the Dow higher were retailers

Wal-Mart

(WMT) - Get Walmart Inc. Report

and

Home Depot

(HD) - Get Home Depot, Inc. (HD) Report

.

Multimedia giant

AOL Time Warner

(AOL)

TheStreet Recommends

was rising after the recently merged company reported joint earnings of 28 cents in the fourth quarter, compared to a hypothetical 24 cents in the last quarter of 1999. When merger costs and other expenses are included, the combined company lost 25 cents a share in the last quarter of 2000.

TheStreet.com

wrote

a separate story on the earnings report, which is jam-packed with numbers for AOL, Time Warner and the merged company. AOL Time Warner was up 2.5% to $55.69.

Data Days

The preliminary estimate of gross domestic product for the fourth quarter, released this morning, showed the economy is slowing even more dramatically than was expected, with the smallest rise since the second quarter of 1995.

GDP grew 1.4%, well below the 1.9% pace expected by economists and the third quarter's 2.2% increase. The GDP price index -- a key inflation measure -- came in up 2.2%, ahead of forecasts for a 2% rise and the third quarter's 1.6% rise. Gross domestic product measures the change in the market value of goods, services and structures produced in the economy, while the price index measures the prices of everything -- including imports -- that Americans buy. The lower GDP number may bode well for a more aggressive Fed.

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Sector Watch

Oil stocks were rising after the Prudential upgrade. The

American Stock Exchange Oil & Gas Index

was up 1.1%.

Investors wanted nothing to do with drugs today. The stocks were mired in red, and the

American Stock Exchange Pharmaceutical Index

was down 0.9%.

Merck

(MRK) - Get Merck & Co., Inc. (MRK) Report

was slipping 1% and

Eli Lilly

(LLY) - Get Eli Lilly and Company (LLY) Report

was off 1.4%.

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Bonds/Economy

Treasury prices are up as traders wait for the Fed to announce the results of their monetary policy meeting later.

The long bond has been selling higher by about a point on news that the Treasury department is being asked by the

Bond Market Association

to eliminate the 30-year bond following the government's August 2001 auction. The longer end of the market is also benefiting from the auction next week of $11 billion and $10 billion in 10-year notes and 30-year bonds, respectively. Yields are down slightly, by less than five basis points for all securities.

The bond market has been solidifying over the last two days on expectations of aggressive Fed easing, and economic data released this morning did little to change the prevailing outlook. Except for the private real estate market, which gained substantially, the macroeconomic and manufacturing numbers came in very low, justifying analysts' opinion the central bank will go a long way in helping the economy.

The benchmark 10-year

Treasury notelately was up 10/32 to 104 5/32, lowering its yield to 5.19%.

The

Mortgage Applications Survey

(

definition |

chart |

source

) indicated a decline in mortgage and refinancing activities. The purchase index was down to 298.1 in the week ending Jan.26 from 332.6 in the previous week. The refinancing index slid to 1992.1 from 2123.3.

The

gross domestic product

(

definition |

chart |

source

), which measures the change in total output of products and services in the country, grew by 1.4% in the fourth quarter of 2000. This is lower than the rate of 1.9% forecasted by economists in a

Reuters

poll, and the slowest pace of growth since the second quarter of 1995.

The

Chicago Purchasing Managers' Index

(

definition |

chart ) dropped to 40.2 in January from 45.2 in the previous month. The prospects were for a drop to 43.2, and the current reading is the lowest since Nov. 1982. Expansion of factory activity is considered positive when the gauge is above 50.

New home sales

(

definition |

chart |

source

) shot up more than expected by 13.4% in December to 975,000 units sold, and are at their highest level since Nov. 1998. Low mortgage rates account for the higher number, which stands at 90,000 units more than what economists had been expecting.

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