The market was bailing on the idea of an interest rate cut before the next official meeting of the Federal Reserve.

Since Friday, talk had made a

Fed move before March 20 seem likely -- at least much wished for. But Fed Chairman

Alan Greenspan's speech before the

House Finance Committee

this morning quashed that hope and sent the major stock market indices tumbling.

Light volume yesterday indicated there was money on the sidelines waiting to see what the Big Al might say today, but also waiting for some kind of positive news to entice them back into action. While Greenspan expressed greater concern about the economy than he did in a similar speech two weeks ago, his words did not suggest an intermeeting cut was at hand.

The

Dow Jones Industrial Average and the

Nasdaq Composite Index were lately both at session lows, with nothing in the ether to put a fire in investors' bellies. The Nasdaq keeps hitting new lows. And investors are being feed more negative earnings news and crummy research notes.

Take the can't-seem-to-stay-out-of-trouble chipmakers.

Altera

(ALTR) - Get Report

was the object of scorn today thanks to a

warning it put out after the close on Tuesday. It saw

UBS Warburg

and

Lehman Brothers

come out with scissors to

cut earnings estimates. Altera was off 2.4%.

Altera's fallout hit

Xilinx

(XLNX) - Get Report

, which also got socked with an estimate

cut by Lehman. It lately was down 3.6%.

Elantec Semiconductor

(ELNT)

created its own

problems when it came out with an earnings warning for its second quarter, citing weakening demand in the PC industry. The stock was tanking, lately off 30.5%.

The Dow's bad day was being fed by a mixed bag of detractors.

General Motors

(GM) - Get Report

,

IBM

(IBM) - Get Report

and

United Technologies

(UTX) - Get Report

were each taking 10 or more points away from the blue-chip index.

Coca-Cola

(KO) - Get Report

announced a deal with another

blue-chip partner,

Disney

(DIS) - Get Report

. The two will

pair up to jointly market "innovative and nutritious" children's beverages under the Disney brand. Last week, the software giant announced that it and

Procter & Gamble

(PG) - Get Report

would start a

stand-alone company to sell their juices, juice-based drinks and snacks. Coke was 0.9% higher, while Disney was up 0.3%.

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Sector Watch

Investors weren't even seeking shelter in the safety of gold. The

Philadelphia Stock Exchange Gold and Silver Index

was dropping 3.3%. The index lately has gotten a nice bounce from frightened investors fleeing to the ultimate defensive.

Still, not all defensives were on the slide. Drugmakers were doing fairly well. The

American Stock Exchange Pharmaceutical Index

was rising 1%.

Eli Lilly

(LLY) - Get Report

yesterday won approval from the

Food and Drug Administration

for its ever-popular depression treatment Prozac to be administered in a weekly form. It was up 1.9% today.

With hope fading for an intermeeting cut, financials were getting slaughtered in recent action. The

American Stock Exchange Broker/Dealer Index

was 3.5% lower and the

Philadelphia Stock Exchange/KBW Bank Index

was down 2.4%.

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Bonds/Economy

Treasuries are mixed as traders realize they will probably have to wait until later in March for an interest rate cut. The short-dated securities, which are more sensitive to revisions in short-term lending rates, are moving positively now after having slipped earlier this morning. The long bond is down slightly, while its yield has not changed much.

Federal Reserve chairman

Alan Greenspan today updated his Feb. 13 testimony before Congress. Speaking to the

House Financial Services Committee

, he once again

expressed concern about the economy, reiterating that he expects a slow recovery and possibly more dips before the eventual pickup. Though his words clearly point to further rate cutting, his remarks also snuffed out hopes that the Fed would move before its next scheduled meeting, on March 20.

The benchmark 10-year

Treasury note lately was up 3/32 to 14/32, lowering its yield to 4.944%.

In economic news, the revised reading of the

gross domestic product

(

definition |

chart |

source

), which measures the rate at which goods and services are produced in the nation, is at 1.1% for the fourth quarter of last year, its slowest growth since the second quarter of 1995, when it was 0.3% lower. Still, it is slightly above the 1.0% predicted by economists in the

Reuters

poll.

The latest

Mortgage Applications Survey

(

definition |

chart |

source

) detected an increase in the purchase of new units but a decrease in home refinancing. For the week ended Feb. 23, the purchase index rose to 291.4 from the 274.3 in the previous week. The refinancing index fell to 2140.4 from 2346.1. Greenspan mentioned the relatively strong showing in home

and automobile sales as a sign that some sections of the economy are holding steady.

The

Chicago Purchasing Managers' Index

(

definition |

chart ) rose to 43.2 during February after falling to 40.2 for January. The gauge indicates a contraction in the manufacturing sector when below 50.

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