Market Update: Stocks See No Relief in Late-Morning Trading - TheStreet

(Updated from 11:11 a.m.)

Just yesterday, we were laughing and joking about how the market was attracting more investors back and things were looking up, but that was before PC giant

Apple

(AAPL) - Get Report

issued an earnings warning.

After yesterday's closing bell, Apple said it expects to miss fourth-quarter earnings estimates. Investors dragged the company's shares into the mud during after-hours trading, cutting the company's value almost in half.

TheStreet.com

took a closer look at the

plunge in a piece last night.

Bear Stearns

,

PaineWebber

and

Morgan Stanley Dean Witter

downgraded the stock this morning. PaineWebber said the sales weakness was Apple-specific, however. This morning, Apple was 50% lower.

But tech may have already been set up for some selling on the heels of triple-digit gains for the

Nasdaq Composite Index yesterday. After seeing losses for a week straight, it closed up 122 points to 3778 Thursday.

The broader market was also having a bad day, with the

Dow Jones Industrial Average and

S&P 500 both down.

"I suspected a selloff anyway, following strength from yesterday," said Rosanne Lang, vice president of program trading at

Cantor Fitzgerald

.

"I'm not sure we'll give back all of yesterday's gains, but we'll probably vacillate through a big part of it. I don't see where we can pick up any strength," she added. "Apple may just serve as an excuse to see weakness in the techs. A lot of these stocks have rallied back with great strength, despite intraday downswings. It remains to be seen how much upside remains out there on any given day."

Dow components

Hewlett-Packard

(HWP)

and

IBM

(IBM) - Get Report

definitely weren't seeing any of the upside today. H-P, down about $6.56 to $97.25, was taking about 56 points away from the index, and IBM, off $4 to $111.13, was taking away almost 40 points.

Perhaps the worst news from Apple is that, like

Eastman Kodak

(EK)

, which warned of an earnings miss Tuesday morning, Apple cited a slowdown in sales across all geographies. This sets them apart from other companies that have blamed expected shortfalls on a depressed euro or rising oil prices. It's bad news for PC-makers at a time when worries over a slowdown in PC sales have been building. The

Philadelphia Stock Exchange Computer Box Maker Index

sank 11.6%.

Elsewhere,

United Airlines

(UAL) - Get Report

fell 5.7% this morning after it warned that it expects to report a loss for the third quarter and possibly in the fourth, due to operational "disruptions." The airline was plagued by labor problems over the summer.

Mattel

(MAT) - Get Report

announced that it was selling its troubled

Learning Co.

unit, in what

The Wall Street Journal

called the "worst-ever corporate deal." Mattel did not disclose a sales price, but said the loss would leave it with an after-tax loss of about $430 million. Mattel was off 4.9%.

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Sector Watch

In addition to the slaughter in box makers, semiconductors and transports were bleeding a bit. Natural gas, though, was making some gains.

The

Philadelphia Stock Exchange Semiconductor Index

lost 4.8% in reaction to

Apple's

(AAPL) - Get Report

news that business was slow.

The

Dow Jones Transportation Average

was 2.2% lower thanks to the earnings warning from

UAL

(UAL) - Get Report

. That warning was taking down fellow components

Delta Air Lines

(DAL) - Get Report

,

US Airways

(U) - Get Report

and

Northwest Airlines

(NWAC)

. It also, unsurprisingly, socked the

American Stock Exchange Airline Index

, which lost 3.8%.

The

American Stock Exchange Natural Gas Index

rose 2.2%. It was lifted by nearly every component, with

Anadarko Petroleum

(APC) - Get Report

and

Enron Oil & Gas

(EOG) - Get Report

leading the charge.

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Bonds/Economy

Treasuries are stronger thanks to slumping stocks and the calendar, which traditionally favors the Treasury market on the last business day of the quarter. Pressure to own safe, liquid assets for appearance's sake often prompts buying of Treasuries by portfolio managers who report their holdings on the last day of the quarter, bond market analysts say.

The day's most important economic indicator, the

Chicago Purchasing Managers' Index

(

definition |

chart ), was stronger than expected. It rose to 51.4 in September from 46.5 in August, indicating renewed expansion in the manufacturing sector.

The benchmark 10-year

Treasury note lately was up 7/32 at 99 21/32, dropping its yield to 5.795%.

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