Market Update: Nasdaq Selling Still the Rage; Dow Ekes Out Gains

<LI> Microsoft, Kodak pull on Dow.</LI><LI>Lucent, AT&T, GE most actives on NYSE.</LI><LI>SOX going down.</LI>

Author:: Kristen French
Publish date:: Nov 28, 2000 11:04 AM EST

<LI> Microsoft, Kodak pull on Dow.</LI><LI>Lucent, AT&T, GE most actives on NYSE.</LI><LI>SOX going down.</LI>

The market floundered at the open this morning as investors timidly nibbled selectively at Old Economy and tech stocks.

The

Dow was lately adding grudgingly to Monday's gains, while the

Nasdaq was following through on its late-in-the-day Monday selling.

But who knows where the indices will end up? Uncertainty over future earnings growth and continuing anxiety over the election outcome hang like a deep sea fog over this market, clouding its direction for what remains of the year.

Another

ugly call on tech stocks this morning wasn't any good for tech sentiment. Especially after the Nasdaq slipped so dramatically off its early day rally yesterday afternoon. Still, the analyst call hit the small stuff -- electronic-components makers. PC-makers and a few optical equipment makers were managing to eke out some gains.

Merrill Lynch's

influential analyst,

Jerry Labowitz, slashed numbers and ratings on electronic-components makers

Vishay Intertechnology

(VSH) - Get Report

AVX

(AVX) - Get Report

and

Kemet

(KEM) - Get Report

. Vishay was lately falling 16.4%. AVX was whacked down 16.5%. And Kemet, which was halted in early trading, was off 21.8%.

Overall, the semiconductors continued to fall today after getting slammed yesterday by a series of lowered ratings and EPS views. The

Philadelphia Stock Exchange Semiconductor Index

was recently down 2.3%.

Ariba

( ARBA), which was downgraded by

Wit Soundview

yesterday, was off 3.8% and

Altera

(ALTR) - Get Report

which saw its earnings outlook lowered by

Lehman Brothers

, was off 1.2%. But

Xilinx

(XLNX) - Get Report

, which was also lowered by Lehman, was rebounding 2.4%.

And there was a smattering of buying in a few tech bellwethers. Networker

Cisco

(CSCO) - Get Report

, PC-maker

IBM

(IBM) - Get Report

and software company

Oracle

(ORCL) - Get Report

were keeping their heads just above water. IBM was 1.3% higher, while Cisco was up 1.4% and Oracle was lately flat.

Over on the NYSE, telecom-equipment maker

Lucent

( LU),

General Electric

(GE) - Get Report

and

AT&T

(T) - Get Report

were getting quite a bit of investor attention; they were the most actively traded stocks on the exchange. Lucent continued to fall after the company disappointed investors

again

early last week. Lucent said it had incorrectly reported fourth-quarter results and could no longer confirm its first-quarter guidance.

General Electric was rising after it named Jeffrey Immelt to succeed Chairman and CEO Jack Welch when he steps aside at the end of 2001. And AT&T was trading on the news that it had named David Dorman its new president. Dorman was previously the CEO of Concert, a joint venture between AT&T and British Telecommunications. GE was up 0.9% and AT&T was falling 2.3%.

The Dow was just barely afloat, as powerful losses in

Microsoft

(MSFT) - Get Report

and

Eastman Kodak

( EK) weighed in heavily. Microsoft was off 4.4% to $67.56. Kodak continued a renewed slope downward over the past month, off 5.4% to $41.56.

Sector Watch

Yesterday's rally in retail was pretty short-lived. The retailers rallied on news that retail sales exceeded expectations after the Thanksgiving holiday. Analysts watch this time closely for clues about how spending will go throughout the holiday season.

But market observers think most of that strength is due to big discounts, which aren't good for retailers in the long run. Some are recommending that investors sell off of yesterday's rally, and investors are listening. Merrill Lynch this morning cut

Gap

(GPS) - Get Report

to intermediate-term accumulate from buy. It was lately off 5.3%. Other retailers were also lower; the

S&P Retail Index

was falling 1.1%.

Retail stocks have been falling on fears that the slowing economy and weaker stock prices in general would keep shopper's wallets closed during the most important time of the year for retail sales.

Defensive stocks were getting some juice from tech selling, with drugs, tobacco, energy and paper stocks seeing a bit of green light.

Financials were also higher after Goldman Sachs raised financial giant

Lehman Brothers

( LEH) to market outperformer from market performer. The financials have been under pressure lately on credit risk concerns.