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Market Update: Indices Heading South After Last Week's Pain

<LI>SOX higher on Lehman comments.</LI><LI>3M, J.P. Morgan bringing down the Dow.</LI> <LI>British Telecom, AT&T rising on deal news.</LI>

So much for that. What initially looked like a spirited open for tech stocks turned into a confused jumbled mess of unimpressive action near the flatline. The

Nasdaq Composite Index wasn't getting very far on either side of the flatline, lately down 32 to 3803, while the

Dow Jones Industrial Average was heading deeper into the red, 76 lower to 10,851.

The broader market, like a cow out to pasture, wasn't going much of anywhere, with the

S&P 500 lately down 8 to 1458.


Russell 2000

was off 7 to 524, while Internet Sector

index was down 16 to 787.

Last week, worries that corporate profits would surrender to a slowing economy, a depressed euro and high-flying oil prices generated an ugly mess of selling.

But some optimistic comments from

Federal Reserve Chairman

Alan Greenspan

this morning on continuing growth in technology initially seemed to dispel some of that concern. Addressing the

American Bankers Association

, Greenspan said there was no sign that the explosion of technological innovation that's transformed the financial industry was coming to a close.

"We continue to move at an exceptionally rapid pace, fueled by both computing and telecommunications capabilities," Greenspan said.

But it's not clear what will stick this morning.

Some reassuring comments on tech mammoth


(MSFT) - Get Report


Goldman Sachs

analyst Rick Sherlund this morning gave this stock some upside in preopen action, but lately Microsoft had slipped 0.9% to $63.63.

Sherlund said in a report that Microsoft had no plans to pre-announce results and that it remained comfortable with revenue estimates for the September quarter.


(QCOM) - Get Report

continued to fly higher on an upgrade from Goldman this morning, and was lately up $4.75 to $71.

Putting the most pressure on the Dow was

J.P. Morgan

(JPM) - Get Report

, which was knocking some 24 points off the index.

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Other movers included telecoms

British Telecom




(T) - Get Report

which were higher after they announced talks to hitch up their business services and wireless divisions. British Telecom was up 1.5% and AT&T was 1% lower.

Abbott Labs

(ABT) - Get Report

was under water, off 5.1%, after the

Federal Drug Administration

approved the company's new HIV drug sooner than expected.

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The disinversion of the Treasury yield curve is continuing this morning, with the 30-year Treasury bond's yield now higher than the five-year note's for the first time since January.

It's happening because Treasury prices are mixed. Long-maturity issues are lower in price, causing their yields to rise relative to those of the short-maturity issues, which are little changed.

This continues a trend that emerged last week based on two key assumptions: First, that the Fed is through hiking interest rates, and may even cut the

fed funds rate in the next several months, if rising energy prices cause economic growth to slow too much. Investors typically push up long-term yields relative to short-term ones when they expect the Fed to take action to stimulate economic growth.

Second, Election Day could spell the end of the policy of using federal government surplus funds to pay down the national debt by buying back mainly long-maturity Treasuries from investors, which inflates their value relative to shorter-term Treasuries.

The benchmark 10-year Treasury note was lately down 4/32 to 99 4/32, yielding 5.869%.

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Sector Watch

Semiconductors were one of few sectors getting a boost this morning.

Micron Electronics



Micron Technology

(MU) - Get Report

were giving the index strength after

Lehman Brothers

made positive comments on the companies this morning. Lehman raised its earnings per share estimates and price target on the former this morning and said PC demand remains strong. It also reiterated its buy on the latter, saying "inflection point in demand should drive firming prices."

Micron Electronics was lately up 4.1%, while Micron Technology was up 5.2%. The

Philadelphia Stock Exchange Semiconductor Index

was lately up 1.1%.

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