(Updated from 10:42 a.m. EST)

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The major markets were mirroring the mood of most of America: irritation and confusion.

The

Nasdaq Composite Index, which had triple-digit losses yesterday, and the blue-chip

Dow Jones Industrial Average, which had some losses of its own Wednesday, were both down today, though off their session lows.

Usually, the

Producer Price Index, which is a key measure of inflation, would be enough to keep investors occupied. This morning, the October PPI, as the index is known, rose 0.4%, higher than the 0.1% increase that was expected by economists polled by

Reuters

. Excluding volatile food and energy, it fell 0.1% compared to the 0.1% rise that was expected.

The PPI report also revealed wholesale prices grew at a slower rate in October on the heels of moderating energy costs, although the modest decline likely does not signal that the

Federal Reserve will consider cutting interest rates.

The index measures the change in prices received by domestic producers of products in all stages of processing (that's crude materials, intermediate materials and finished goods). The "core" PPI, which excludes the volatile food and energy sectors, gives a focused picture of underlying inflation trends, since it looks at what's happening to wholesale prices.

Jay Meagrow, vice president of trading at

McDonald

, said, "The core number looked OK, but for the first time, it may not have as big effect as it usually does."

He said the information is secondary to what's on everybody's minds, and with every news report it's starting to sound like we're still not going to know today who the new president will be. That waiting in limbo will keep the market in flux again today.

But it wasn't like there was a lack of non-election news today. Earnings and merger news abounded this morning.

Dell

(DELL) - Get Report

lately was down 7.2% ahead of its post-close earnings announcement.

TheStreet.com

wrote about what investors are hoping for from Dell in a

separate story. And we recently took a look at how

third-quarter earnings have shaken out. Dell and its boxmaker cohorts continued the slide that started yesterday. The

Philadelphia Stock Exchange Computer Box Maker Index

lately was 3.7% lower.

IBM

(IBM) - Get Report

was down 1.9% after it announced in an after-hours

conference call that wide availability of its newest main-frame computer would be delayed until next year. The computers had been expected to ship in mid-December, but Big Blue said it wouldn't have the supply to satisfy consumer demand in the fourth quarter.

The company declined to talk about its fourth-quarter results. It did say that a shortage of ceramic packaging, which hurt IBM's third-quarter sales, would continue through the end of the year.

The

S&P Retail Index

lately was falling 3.3%.

Best Buy

(BBY) - Get Report

was the sector's biggest drag. It plummeted this morning after issuing an earnings warning because of a slower economy and lower gross margins. The retailer said its third-quarter earnings are expected to come in at 27 cents a share and fourth-quarter earnings are predicted to be 90 cents.

First Call/Thomson Financial

estimates put Best Buy's third quarter at 44 cents and fourth quarter at $1.02. The stock recently was down a whopping 36.6%.

Meanwhile, it was reported last night that

Lehman Brothers

(LEH)

may be considering a bid for

Bear Stearns

(BSC)

. The interest in merging the two financial giants is believed to be at a very early stage, and observers say there is only a slim chance of an offer, according to a report in

The Financial Times

. Lehman was down 2%, while Bear Stearns was up 4.5%.

According to the report, analysts say Lehman is attracted by Bear Stearns' clearing business (the back office side of trading). However, analysts also speculate that Lehman may be put off by cultural issues and by the high price being demanded by Bear's management, the newspaper reported.

If a deal does happen, it would continue the consolidation trend in the financial services sector. Just this week,

J.P. Morgan

(JPM) - Get Report

and

Chase

(CMB)

got the nod from antitrust regulators that their merger deal could go through.

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Sector Watch

The sectors that were showing strength yesterday on a potential win for George W. Bush weren't so confident this morning.

The

American Stock Exchange Tobacco Index

was down 2.2%.

Philip Morris

(MO) - Get Report

was 4.6% lower, while

RJ Reynolds

(RJR)

was off 5.3%.

Also down today was the

Philadelphia Stock Exchange Oil Service Index

. It was losing 2.1%, after an initial post-election bounce.

TheStreet.com Internet Sector

index was getting the squeeze. It lately was dropping 8%, with killer drag from component

CMGI

(CMGI)

. CMGI was down 16.9% after online marketing company

Engage

(ENGA)

, which is majority owned by CMGI, warned that its first-quarter revenue would be lower than expected.

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Bonds/Economy

Bonds continue to shrug off the presidential impasse and took some encouragement from the latest price data. A weak start in the equities market was also helpful to the fixed-income sector.

The benchmark 10-year

Treasury note was lately up 12/32 at 99 18/32, to yield 5.810%.

The 30-year

Treasury bond was at 105 20/32, up 13/32, to yield 5.848%.

The

Producer Price Index

(

definition |

chart |

source

) for October rose 0.4% after an 0.9% rise in September, An increase of 0.1% had been expected.

The core rate---which cuts out food and energy costs--- fell by 0.1% after a rise of 0.3% in the prior month. Overall, the index is seen as benign, despite the tick up in the headline rate.

Initial jobless claims

(

definition |

chart |

source

) for the week ended Nov. 4 rose sharply to 344,000 from 309,000 last week, well above expectation. The claims number is the highest since Jan. 9, 1999, and the four-week average for initial claims has now moved up to 317,250 from 303,250 on Oct. 14.

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