The major indices were looking about as pretty as the sludge that's all over Wall Street this morning.

With the

Nasdaq hitting levels it hasn't seen since January 1999 -- it was lately down 51 to 2193 -- the

S&P 500 very nearly in a bear market for the first time in 10 years -- it was down 22 to 1231 -- and the

Dow down 2.4% on the year -- it was lately off 143 to 10, 383 -- one has to latch onto pockets of optimism.

Trying to find a bright side to today's grim picture, one might note that these three indices lately were off their session lows and there are still hours to go before the closing bell. After all, yesterday, in the hour before the close, the Dow rallied back from a triple-digit loss to a slightly positive finish.

Still, a comeback isn't going to be easy, with all of the negative news that emerged last night and this morning.

One of the most noxious pieces of news came from networking computing giant

Sun Microsystems

(SUNW) - Get Report

, which in a conference call

sharply lowered fiscal third-quarter earnings and revenue guidance after the close of regular trading yesterday. Sun was the most actively traded stock on the Nasdaq, falling 2.7% to $20.25.

Of course, Sun's news was really no shock. The company's shares have plunged over the last week as

investors worried that Sun would make just such an announcement on its regularly scheduled quarterly call. But analysts were

backpedaling on the stock this morning.

Goldman Sachs

, which has the stock on its recommended list,

Credit Suisse First Boston

, which rates it a buy and

Lehman Brothers

, which rates it a strong buy, have done the usual, cutting estimates to reflect company guidance. They all maintained their existing ratings.

Big-cap techs were suffering again, including

Cisco

(CSCO) - Get Report

,

Oracle

(ORCL) - Get Report

and

Intel

(INTC) - Get Report

.

The already severely beaten-down telco sector received another harsh blow with mobile-phone maker

Motorola

(MOT)

warning this morning that it will miss already lowered first-quarter earnings estimates and might even post a loss. Motorola was off 4.5% to $16.51, and was one of the top three most-actively traded stocks on the

New York Stock Exchange.

In yesterday's action, rival

Nokia

(NOK) - Get Report

took a dive on worries about a profit warning, pulling down

Ericsson

(ERICY)

with it, and killing European markets. Today, Motorola took its place as the big telco domino, knocking them way down again. Nokia, which along with

Alcatel

(ALA)

was downgraded by

Goldman Sachs

, was 9.8% lower to $20.92 and Ericsson was off 2.3% to $7.94.

Specialty chipmakers

Altera

(ALTR) - Get Report

and

Xilinx

(XLNX) - Get Report

were falling after being

downgraded by Lehman Brothers. Altera was sliding 4.8% to $24.81, and Xilinx was down 7% to $39.88. The

Philadelphia Stock Exchange Semiconductor Index

was down 4.8%.

Many fiber-optics names were getting hit after

Morgan Stanley Dean Witter

cut its price target on sector darling

JDS Uniphase

(JDSU)

to $50 from $95. JDS was falling 3.4% to $29.44;

Nortel

(NT)

, which warned of slowing in coming quarters late last week, was dropping 3.9% to $19.17.

The

blue-chip

Dow was getting hit hardest by bellwether

IBM

(IBM) - Get Report

, after

Salomon Smith Barney

cut the company's price target, to $135 from $140, and shaved its third-quarter sales and profit targets. IBM was cutting 48 weighted points from the Dow.

Only eight of the index's 30 stocks were in the green, with

Microsoft

(MSFT) - Get Report

and

The Home Depot

(HD) - Get Report

contributing the most to the upside.

Investors have begun to doubt earlier predictions that the economy and earnings are destined recover in the second half of this year. A new round of major earnings warnings in the past month has pushed some pros to start looking farther out.

Back to top

Sector Watch

Investors were seeking shelter in the ultimate defensive sector -- gold. The

Philadelphia Stock Exchange Gold and Silver Index

was 4.3% higher.

Brokerages, which suffer when the market is off, were getting slammed today, with the

American Stock Exchange Broker/Dealer Index

plunging 4.1%.

Back to top

Bonds/Economy

Treasury prices have opened higher as stock market weakness continues to shift investing momentum toward safer government securities.

The short end of the money market is once again being buoyed by talk of an intermeeting move by the

Federal Reserve, especially as the broad equity indexes appear to be in danger of slipping a couple of hundred points more. The yield curve, which tracks the data by time-to-maturity, shows the difference between yields of the two-year note and the 30-year Treasury at about 0.9%. This is the widest spread since November 1998.

White House economic advisor Lawrence Lindsey expressed President

George W. Bush's

administration's determination to realign the economy in a positive direction. Talking to an Italian daily newspaper, he said the "right road is lower interest rates and retroactive tax cuts." He also ascribed the spike in consumer price to higher energy costs, terming it a "technical reason."

The benchmark 10-year

Treasury note lately was up to 14/32 to 99 4/32, lowering its yield to 5.117%.

There are no economic releases due for today.

-- Staff reporter Anwar Husain contributed to this article.

Back to top