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Egads! The market was looking just miserable after the lunch hour.

There wasn't much to be optimistic about with the

Nasdaq hitting levels it hasn't seen since January 1999, the

S&P 500 very nearly in a bear market for first time in 10 years, and the

Dow down 2.4% on the year.

Although the major indices were very near session lows, the day's not over yet, and yesterday, in the hour before the close, the Dow rallied back from a triple-digit loss to a barely, but still green 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


, 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 3.3% to $20.

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. In the usual fashion, such analysts as

Goldman Sachs


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TheStreet Recommends

Credit Suisse First Boston


Lehman Brothers

came out with their

scissors to trim the stock's estimates, but they all maintained their existing ratings.

Big-cap techs were suffering again, including










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



warning this morning that it will miss already lowered first-quarter earnings estimates and might even post a loss. Motorola was off 6% to $16.26, and was one of the top three most-actively traded stocks on the

New York Stock Exchange.

In yesterday's action, rival



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



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



was downgraded by Goldman, was 9.8% lower to $21 and Ericsson was off 2.7% to $7.88.

Another related stock --



-- was getting killed, down 19.1% to $54.12, It was getting socked by Sun and by

Deutsche Banc Alex. Brown

, which downgraded Qualcomm to buy from strong buy along with five other wireless telecom products and services companies.



, which makes switches and diagnostic systems for the communications industry, and



, which makes amplifiers for wireless networks, were among those on the list and that were getting punished. Tekelec was tumbling 9.9% to $19.38, while Powerwave was sinking 12.7% to $17.69.

Specialty chipmakers






were falling after being

downgraded by Lehman Brothers. Altera was sliding 5.5% to $24.63, and Xilinx was down 7.3% to $39.75. The

Philadelphia Stock Exchange Semiconductor Index

was down 5.5%.

Many fiber-optics names were getting hit after

Morgan Stanley Dean Witter

cut its price target on sector darling

JDS Uniphase


to $50 from $95. JDS was falling 4.1% to $29.25;



, which warned of

slowing in coming quarters late last week, was dropping 6.6% to $18.64.


blue-chip Dow was on a descent that was lately getting worse, with only four of its 30 components rooting for the positive side.

Eastman Kodak


was its biggest cheerleader, adding about 10 points to the upside.

However, it was fighting against bellwether



, 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 51 weighted points from the Dow.

So, you know that hope of a "second-half recovery?" Well, it's fading as a new round of major earnings warnings and contradictory economic news in the past month has pushed some pros to start looking farther out for an upturn.

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Sector Watch

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

Philadelphia Stock Exchange Gold and Silver Index

was 4.5% higher.

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

American Stock Exchange Broker/Dealer Index

plunging 5.5%.

Everything tech was getting a big fat raspberry, with the

Morgan Stanley High-Tech 35

down 4.3% and the

Philadelphia Stock Exchange Semiconductor Index

5.7% lower.

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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 24/32 to 99 14/32, lowering its yield to 5.074%.

There are no economic releases today.

-- Staff reporter Anwar Husain contributed to this article.

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