Market Update: Midday Has Dow Sunk by Tech, Nasdaq Back in Red - TheStreet

Market Update: Midday Has Dow Sunk by Tech, Nasdaq Back in Red

<LI>H-P, Compaq, Dell crippled by SCI downgrade.</LI>
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An earnings warning from electrical-components maker

SCI Systems

(SCI) - Get Report

and a

Banc of America

downgrade on

Intel

(INTC) - Get Report

were stinking up the tech bellwethers this morning, which were leaning on both the

Nasdaq Composite Index and the

Dow Jones Industrial Average.

But the indices have sported wild intraday swings of late, and it was unclear where they'll end the day. Earlier this morning, it looked like tech stocks might get another bounce, and the Nasdaq has tried for a turnaround twice this morning. The Nasdaq Comp was lately back in the red, down 11 to 3838.

SCI Systems cut its fiscal first-quarter profit forecast this morning, citing weakness in consumer electronics and dead PC-demand. News of weak PC-demand was crippling SCI's biggest customers in that arena,

Hewlett-Packard

(HWP)

,

Compaq

(CPQ)

and

Dell

(DELL) - Get Report

.

Merrill Lynch

said the earnings warning was "entirely company specific" and reduced SCI's first-quarter revenue estimate to $2 billion from $2.3 billion and earnings per share to 34 cents from 38 cents.

The Dow was certainly feeling pressure from H-P and Intel. H-P was down 3.9% on the SCI news and continued worries over its plans to acquire

PricewaterhouseCooper

, and was lately slashing some 34 points from the Dow. Intel was 4.9% lower, cutting around 18 points from the blue-chip benchmark index. The Dow was 57 lower to 11,178.

The S&P 500 was down 4.5 to 1478, the Russell 2000 was 1.3 lower to 531.

In the Internet world, Web giant

Inktomi's

(INKT)

announcement that it will acquire

Fastforward Networks

for some $1.3 billion in stock was giving some push to the sector. Fastforward Networks makes technology for distributing online broadcasts.

According to the terms, Inktomi will exchange 11.9 million shares for all outstanding shares options and warrants of the closely held firm. Fastforward will take on the Inktomi label, as its media unit, and will be led by current Fastforward CEO and President Abhay Parekh.

TheStreet.com Internet Index

was falling 3.2%.

Though yesterday's news,

Chase Manhattan's

(CMB)

$33.2 billion acquisition of

J.P. Morgan

(JPM) - Get Report

continued to be a big item for today's market; Chase was the most active stock traded on the New York Stock Exchange.

Chase was lately down 5.5% to $49.94, while J.P. Morgan was down 3.9% to $178.25. The deal values Morgan at $207 a share based on Chase's closing price yesterday.

TheStreet.com

wrote an article about the

details of the deal that also analyzes what the merger means for the

companies.

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Sector Watch

Despite negative comments on DRAMs -- or commodity chips -- from

Morgan Stanley Dean Witter

, the sector was lately getting a lift. But the

Philadelphia Stock Exchange Semiconductor Index

was down fractionally, after getting an earlier lift thanks to

Rambus

(RMBS) - Get Report

, which was soaring 5.4%. The chip-maker was countering weakness from

Micron

(MU) - Get Report

and Intel on news that it has entered a new chip-licensing pact with Japanese-based

NEC Corp

.

Brokerage stocks

Lehman Brothers

(LEH)

and

Merrill Lynch

(MER)

-- considered merger targets -- were falling on the Chase-J.P. Morgan mega-merger news. Lehman was lately down 2.3%, while Merrill was off 4.7%. Other brokerages were also under pressure, and the

American Stock Exchange Broker/Dealer Index

was off 0.7%.

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Bonds/Economy

The 10-year Treasury note was lately up 7/32 at 100, and yielding 5.749%.

Yesterday, treasuries remained flat in high-volume trading.

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