(

Updated from 2:26 p.m. EST

)

After the

Federal Reserve kept rates unchanged and said the risks of recession now outweigh the risks of inflation, the

Dow dropped about 75 points.

The Dow started to rise again after investors digested the contents of the Fed's announcement.

CNBC

originally said the Fed had not changed its outlook about the economy. In fact, it has. The Fed had previously said the risks of inflation outweighed the risks of recession.

The

Nasdaq Composite Index, which had been up 46 points before the announcement, also fell back. Both had been firmly on the upside and moving up steadily earlier in the afternoon. Early action indicated some timidity in the market ahead of the announcement from the decision from the

Federal Open Market Committee, the Fed's policy-making body.

Bond prices were lately unchanged. They had earlier been down 14/32.

Not that there wasn't any other news to distract investors and traders today as more companies headed into the confessional.

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Blue-chip

SBC Communications

(SBC)

was grabbing attention and recently was the most actively traded stock on the

Big Board after it warned that it sees 2001 earnings at the lower end of estimates. The San Antonio-based phone company found no absolution from investors, lately dropping 12.1%. And

Merrill Lynch

was even less forgiving, downgrading the company and slashing both its 12-month target and 2001earnings view.

The Dow was fighting the downward pull with help from its tech contingent of

Hewlett-Packard

(HWP)

,

IBM

(IBM) - Get Report

and

Intel

(INTC) - Get Report

.

Also

Coca-Cola

(KO) - Get Report

was adding some pop. It got a boost after its purchase rating was reaffirmed by

Goldman Sachs

yesterday. It was up 5.6%.

Elsewhere on the NYSE, contract electronics maker

Solectron

(SLR)

was jumping 19.5% after it posted better-than-expected earnings. It also reassured investors by saying that demand for data networking and telecommunications products more than offset the slowdown in PC and mobile telephone demand.

Ciena's

(CIEN) - Get Report

news that it agreed to

pay $2.6 billion in stock for privately owned

Cyras

didn't sit well with investors. Ciena, which makes telecommunications equipment, was off 16.3%.

Discount variety store chain

Dollar Tree

(DLTR) - Get Report

warned its fourth-quarter earnings would miss estimates. That's not surprising since retailers across the board have warned of a slowdown in sales. Dollar Tree also got socked with some earnings and price target cuts y Goldman.

Also,

Merix

(MERX)

was plunging 48.5% after it announced better-than-expected second-quarter earnings, but issued a warning for the third-quarter, citing a slowdown in demand. The company makes products used in computer circuit boards.

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Sector Watch

There was a broad rally across the board despite a lot of negative company news.

Semiconductors were pulling out a strong rally in the face of a note from

Credit Suisse First Boston

telling investors that now is not the time to snap up those battered semiconductors. In the note, the analyst wrote, in all capital letters no less: "We continue to believe that a better buying opportunity will present itself in the

first quarter of 2001."

The

Philadelphia Stock Exchange Semiconductor Index

was up 4.8%.

Financial stocks slid a bit after the Fed's announcement, but quickly edged back up. The

American Stock Exchange Broker/Dealer Index

was up 2.2%, while the

Philadelphia Stock Exchange/KBW Bank Index

was 1.7% higher.

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