Market Update: Opening Bounce Fades in Midmorning Trading - TheStreet

Despite triple-digit losses yesterday and the obliteration of almost all of its August rally in recent weeks, the

Dow Jones Industrial Average wasn't looking cheap enough this morning, and a meager early bounce sputtered shortly after the open.

The

Nasdaq Composite Index was also paring back its gains after rising as much as 60 points at the open. The broader market wasn't going much of anywhere, as usual, with the

S&P 500 stuck at the flatline.

This pre-announcement season has brought disappointment after disappointment as companies have succumbed to a slowing economy, a weak euro and rising oil prices. But with the season coming to a close, there was some good news out there this morning.

Maybe

the Nasdaq will be finally be able to sustain a little bit of upside. Recent attempts, though, have failed miserably.

Networking systems provider

3COM

(COMS)

was the morning's star. After reporting a far narrower-than-expected loss post-close last night, and some positive revisions on 2001 loss estimates from

Lehman Brothers

and

Goldman Sachs

, 3COM was one of the Nasdaq's most actives. The stock was lately soaring, up 20.6%.

Two of 3COM's primary competitors,

Lucent

(LU)

and

Nortel

(NT)

were falling, down 2.3% and 5.2%.

priceline.com

(PCLN)

was raining on 3COM's parade, however. The Internet retailer said this morning it sees

third-quarter revenues reaching $340 million to $345 million compared to estimates of $360 million to $380 million. The company blamed weakness in September airline tickets sales. priceline.com's shares have been considerably beaten up of late, and the news may already be priced into the stock. priceline.com was lately 41.2% lower to $10.94.

Tibco Software

(TIBX)

was another of the day's winners. The stock was soaring after it announced a mobile commerce deal with Finnish mobile phone company

Nokia

(NOK) - Get Report

.

Tibco's majority shareholder,

Reuters

(RTRSY)

, the UK-based news and information company, was also getting a heady lift on the news. Tibco supplies the infrastructure software needed to power big e-commerce businesses. Tibco was lately up 5.1%, Nokia was 1.2% higher and Reuters was up 5.7%.

The Dow was scrambling to stay in the green, getting most of its power from

J.P.Morgan

(JPM) - Get Report

,

Intel

(INTC) - Get Report

and computer-maker

Hewlett-Packard

(HWP)

.

J.P. Morgan was up 1.2% following news of

FleetBoston's

plans to acquire

Summit Bancorp

.

Chase Manhattan

(CMB)

had recently announced plans to acquire J.P. Morgan.

But

Eastman Kodak

(EK)

was still putting pressure on the blue-chip index today. Kodak knocked the wind out of the Dow yesterday after its earnings warning.

Intel was running higher, up 4% to $45.06, after getting beaten to a pulp following an earnings warning last week. H-P was up 2.9% to $101.

Elsewhere on the New York Stock Exchange,

AT&T

(T) - Get Report

,

Lucent

(LU)

and

Nortel Networks

(NT)

were all pressuring to the downside. AT&T has hit a 52-week low as investors tire of waiting for the CEO to engineer a turnaround in business.

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Sector Watch

Semiconductors were making another attempt at a comeback this morning. The sector has been under water of late on concern that chip demand is slowing. The

Philadelphia Stock Exchange Semiconductor Index

was lately up 1.6% to 884.7.

Brokerage stocks were slipping slightly, and banks and insurance stocks were down this morning following news of FleetBoston's planned acquisition. The

American Stock Exchange Broker/Dealer Index

was down 0.5%, while the

Philadelphia Stock Exchange/KBW Bank Index

was 0.95% lower and the

S&P Insurance Index

was off 0.5%.

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Bonds/Economy

Bonds are under pressure in part because a

report in today's

Washington Post

says an error in calculating the

Consumer Price Index

(

definition |

chart |

source

) resulted in it being understated. The error will be corrected and is likely to add 0.1 to 0.3 percentage points to the overall and core inflation rates, the article says.

The error was double-counting some of the adjustments statisticians make for quality improvements when they compare the price of certain products from year to year, the article says.

The

Bureau of Labor Statistics

said it will hold a briefing on the matter at 9:30 a.m. EDT tomorrow, but it had no other comment.

A higher inflation rate devalues bonds because it erodes the value of the fixed interest payments they make.

Overall CPI inflation was running at a rate of 3.4% in August, while core CPI inflation, which excludes food and energy, was running at 2.5%, nearly a two-year high.

The benchmark 10-year Treasury note lately was down 6/32 at 99 13/32, lifting its yield to 5.831%.

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