Market Update: Financials' Winning Streak Ends; J.P. Morgan, Intel Hampering Dow - TheStreet

Market Update: Financials' Winning Streak Ends; J.P. Morgan, Intel Hampering Dow

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The major indices are having a rough go of it today, held down by brokerages and computer boxmakers. The Dow Jones Industrial Average is being hurt by Intel (INTC) - Get Report and Hewlett-Packard (HWP) , but even excepting those two stocks, it isn't much of a day for the 30-stock average.

The Dow was lately off 55 to 11,178; the

S&P 500 was recently up 2 to 1483, and the

Nasdaq Composite Index was up 29 to 3878. The small-cap

Russell 2000 dropped a bit to 532.

TheStreet.com Internet Sector

, or the

DOT index, was up 4 to 798.

Both the Dow and the Nasdaq are feeling the impact of Intel's losses. The company was downgraded, along with fellow semiconductor maker

Advanced Micro Devices

(AMD) - Get Report

, by

Banc of America Securities

analyst Richard Whittington, broadly citing concerns over demand from PC makers and in the case of Intel, delivery problems. Intel was lately down 4.6% while AMD lost 6.2%.

TheStreet.com's

Justin Lahart wrote about the two companies in a

separate piece this afternoon.

Concerns over weakening PC demand are being highlighted this morning by the earnings

warning from electronic components maker

SCI Systems

(SCI) - Get Report

, which said fiscal first-quarter profits would be lower than expected due to diminished demand. SCI is one of the

New York Stock Exchange's biggest losers today, dropping 16.9% to $46.50.

The

Philadelphia Stock Exchange Computer Box Maker Index

is down 0.2%, with the biggest losses coming from SCI's two largest PC

customers --

Compaq

(CPQ)

, down 4.4%, and

Hewlett-Packard

(HWP)

, off 3%.

With the announcement that

Chase Manhattan

(CMB)

plans to purchase

J.P. Morgan

(JPM) - Get Report

, the takeover juice has been squeezed out of the brokerage names, and they're dropping.

After a hefty round of consolidation that culminated with yesterday's Chase-J.P. Morgan announcement, designed to enhance Chase's

clout when stacked against other recently announced combinations, the brokerage stocks are down. There's a sense among traders that the wave of

consolidation may be nearing an end, and if that's the case, the sense is that these stocks are overvalued.

Two of the market's recent big winners,

Lehman Brothers

(LEH)

, down 4.3%, and

Bear Stearns

(BSC)

, off 3.8%, were losing ground today. J.P. Morgan itself is down today, losing 3.6%.

Knight Trading

(NITE)

was flying, up 17.6%, on speculation that the market maker could be

acquired by

Morgan Stanley Dean Witter

(MWD)

.

Sector Watch

Transportation stocks were having a strong day. The

Dow Jones Transportation Average

rose 1.1%, and the

Amex Stock Exchange Airline Index

gained 1.8%. The

Dow Jones Utility Average

hit a new all-time high of 400.06 today, and was still strong lately, up 0.6% to 397.48, as investors continue to buy these stocks.

Crude oil has dropped a bit from its recent high, lately at $34.25.

Delta Airlines

(DAL) - Get Report

gained 1.3%, and

Union Pacific

(UNP) - Get Report

was lately up 1.9%.

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Bonds/Economy

Bond prices are higher thanks to lower oil prices and growing optimism about the monetary policy outlook. Treasury traders are also paying close attention to the corporate bond market, where more than usual new issues are competing for investor dollars.

While there is no major economic news today,

fed funds futures are discounting lower odds than ever that the

Fed will hike interest rates again this year. The December fed funds contract is putting the odds of a hike in the rate to 6.75% from 6.5% currently at just 5%, down from 21% yesterday.

The benchmark 10-year Treasury note was lately up 9/32 at 100 2/32, dropping its yield to 5.741%.

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