Market Update: Investors Spooked by Hewlett-Packard's Earnings Miss

<LI>Nasdaq sticks below 3000 mark.</LI> <LI>Financial stocks struggling.</LI> <LI>Internet companies tumble.</LI>
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Whoa! The bell wrung to open trading this morning and the

Nasdaq Composite Index fell below 3000, its lowest level in more than a year.

The

Dow Jones Industrial Average, stocked with blue-chip stocks, was also down triple digits.

Seems there's little place to hide.

Blame it on the election uncertainty. But blame it mostly on

Hewlett-Packard

(HWP)

. The computer and imaging giant was tumbling 15.2% to $33.19 after reporting that it

missed fourth-quarter earnings by 10 cents a share. That's not a small miss. Estimates were for the company to make 51 cents a share.

H-P wasn't scheduled to announce earnings until Wednesday. The missed earnings follow the company's announcement on September 22 that it would meet fourth-quarter

earnings and revenue targets. The company also today said it ended talks to acquire the consulting arm of

PricewaterhouseCoopers

. H-P's stock had tumbled earlier this fall when those negotiations were first reported.

The news from H-P was not what the

Philadelphia Stock Exchange Computer Box Maker Index

needed to hear today. The index, which tracks the stocks of computer makers, was lately down 3.9%. Last week, the sector was hit by

Dell's

(DELL) - Get Report

news that it had a

weak sales outlook. Investors haven't been hearing much good news from computer makers.

The jitters that H-P is sending through the market are a reflection of the general concern about slowing growth in tech companies. And since the Nasdaq is heavy with technology names, it got socked all around. Internet companies

Yahoo!

(YHOO)

and

Amazon.com

(AMZN) - Get Report

, as well as software companies

Sun Microsystems

(SUNW) - Get Report

and

Intuit

(INTU) - Get Report

, are all trading lower.

Meanwhile, the stocks that were bouncing last week on anticipation of a George W. Bush victory were tanking today. Pharmaceutical companies

Merck

(MRK) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

were lower, as was tobacco stock

Philip Morris

(MO) - Get Report

.

"The market has priced in a high probability of a Bush win. We think the market should and probably will reconsider the probabilities it has assigned to Bush and Gore wins. Especially vulnerable are drug and HMO stocks," wrote political analyst Tom Gallagher of research boutique

ISI

.

Seperately,

Watson Pharmaceuticals

(WPI)

jumped close to 12% after the company reported third-quarter earnings that were in line with lowered expectations because of lower than expected product sales related to its recent acquisition of Schein Pharmaceutical. The company said its upcoming quarter would be strong.

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Sector Watch

The

Philadelphia Stock Exchange Forest & Paper Products Index

was bouncing 3.5% on news of a proposed merger between two of the stocks that comprise the index.

Weyerhaeuser

(WY) - Get Report

offered to buy

Willamette

(WLL) - Get Report

in a $7 billion cash deal, including $1.7 billion worth of Willamette's debt. Willamette's board met, but failed to act on the proposal. Still, Willamette shot up 31.3% to $45.56. Weyerhaeuser was lately off 2.8%.

With most other sectors of the market in the red, financials were in a particularly bad way. The

American Stock Exchange Broker/Dealer Index

was down 4%, while the

Philadelphia Stock Exchange/KBW Bank Index

fell 2.9% lower. The

S&P Insurance Index

lately lost 2%.

J.P. Morgan

(JPM) - Get Report

was lately off 3.7%.

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Bonds/Economy

Bonds were maintaining their positive tone of last week because the fixed-income market is benefiting from a run of soft economic data, the rush away from equities and the stalemate in Florida.

The benchmark 10-year

Treasury note is at 99 30/32, up 9/32, to yield 5.759%.

The 30-year

Treasury bond is at 105 27/32, up 17/32, to yield 5.833%.

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