Market Update: Indices Knocked Down by Intel, Drugs - TheStreet

A downgrade on chip-maker

Intel

(INTC) - Get Report

by

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.

The

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

Merck

(MRK) - Get 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

Yahoo

(YHOO)

, 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.

The

American Stock Exchange Pharmaceutical Index

was lately 2% lower to 383 after

Banc of America

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

Merck

(MRK) - Get Report

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

Abbot Labs

(ABT) - Get Report

was off 1.3% to $42.69.

The

Nasdaq Biotechnology Index

was down 1.7% to 1357.

Other big movers were

America Online

(AOL)

, 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

(TWX)

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

TheStreet.com

wrote about the

FTC's concerns in a separate story.

Meanwhile,

Worldcom

(WCOM)

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

Intermedia Communications

(ICIX)

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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