A downgrade on chip-maker


(INTC) - Get Intel Corporation (INTC) Report


US Bancorp Piper Jaffray

and on the entire drug sector by

Banc of America Securities

this morning knocked the major indices off their feet in early trading.

Market watchers initially were expecting last week's quiet optimism to trickle over into this week, particularly following Friday's friendly jobs and manufacturing activity data.


Dow Jones Industrial Average was bloodied early on by Intel and drug component


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

, which were chipping 17 and 13 points from the index in early trading, respectively. The Dow was lately down 16 to 11,223.

The tech heavy

Nasdaq Composite Index was also getting bashed by Intel and Internet heavy-hitter



, and was 41 lower to 4194. There was no new news on Yahoo this morning.

Elsewhere in the market, the broader

S&P 500 was down 6.9 to 1514, the small-cap

Russell 2000

was down 1 to 541.

Despite weakness in Yahoo,

TheStreet.com Internet Sector

index was up 3.2 to 849.9.

Investors' least favorite sectors so far this morning were health care and biotechnology.


American Stock Exchange Pharmaceutical Index

was lately 2% lower to 383 after

Banc of America

TheStreet Recommends

downgraded the entire group to market perform from overweight on concerns of slowing growth. Sector heavyweight


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

, which was lowered to market performer from strong buy, was off 3.7% to $66.63.

Abbot Labs

(ABT) - Get Abbott Laboratories Report

was off 1.3% to $42.69.


Nasdaq Biotechnology Index

was down 1.7% to 1357.

Other big movers were

America Online


, which was off 2.4% to $56.25. Over the weekend, news came out that the

Federal Trade Commission

likely will block AOL's $129 billion acquisition of

Time Warner


unless the companies agree to let competitors use their cable lines.


wrote about the

FTC's concerns in a separate story.




was the big noise in telecom. The company confirmed this morning that it will buy telecom provider

Intermedia Communications


for close to $3 billion in cash as well as payment of more than $3 billion in Intermedia's debt.

Treasuries continued to trail lower this morning, with the benchmark 10-year note down 5/32 at 100 10/32, and yielding 5.710%.

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