Market Update: Stocks Slip Slightly After Fed Holds Rates Steady

<LI>Financials having tough day.</LI> <LI>Forest and paper stocks seeing solid gains.</LI>
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After so many days of driving the market lower on election uncertainty, the major indices were having their second day of gains.


Nasdaq and the

Dow Jones Industrial Average were lately slipping from highs of the day after the

Federal Reserve said it would hold interest rates steady at 6.5%. At the same time, the monetary policy making body said the risk of rising inflation remains higher than the risk of an economic slowdown

Tech stocks were getting a hefty boost from semiconductors today after chipmaker

Analog Devices

(ADI) - Get Report

posted fourth-quarter earnings that

beat analysts' estimates by 4 cents. Bonus time. The company forecast "solid" revenue growth over the next few years. The stock lately was up 19.6%.

The news helped lift the

Philadelphia Stock Exchange Semiconductor Index

4.9%. Blue-chip but recently battered semiconductormaker


(INTC) - Get Report

was up 4.7%.

Applied Materials

(AMAT) - Get Report

was hopping 4.1% ahead of releasing its earnings after the closing bell.

Chips were fighting the negative vibes from

Network Appliance

(NTAP) - Get Report

, which lately was 18.7% lower. The networking data storage company announced earnings that beat estimates by a penny, but it tempered the solid earnings with a forecast of slower sales growth. On the news,

Bear Stearns

downgraded the stock to attractive from buy.

Another naysayer on the Nasdaq was software company



, which last week reported better-than-expected earnings, but lately was hurt by concerns of slowing growth. It lately was down 8.5%.

On the


Hewlett Packard


was giving back yesterday's gains. Hewlett has taken quite a ride in the past two days, tanking Monday on news it missed earnings estimates by a dime and then rebounding yesterday as investors decided tech stocks looked oversold. It was lately 3.7% lower.

Financials were hurting after

Bank of America

(BAC) - Get Report

said fourth-quarter charge-offs, which are bad loans that are treated as a loss, could be more than double third-quarter levels. It was 8.6% lower. The

Philadelphia Stock Exchange/KBW Bank Index

was sliding 1.7%. Bank of America, along with

First Union


, was hurt by a troubled loan made to



. First Union, which was hurt by this yesterday, was off another 1.6%.

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Sector Watch

Paper stocks had strength today. The

Philadelphia Stock Exchange Forest & Paper Products Index

was rising 1.9% on consolidation fever in the industry.



said yesterday that it expected its $7.5 billion bid for

Fort James


to close "very soon" after its recently extended regulatory review. Also yesterday,


(WY) - Get Report

confirmed that it had financing for its proposed acquisition of

Willamette Industries

(WLL) - Get Report


Energy stocks were strong, with the

American Stock Exchange Natural Gas Index

3.3% higher and the

Philadelphia Stock Exchange Oil Service Index

increasing 3.7%.

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Bonds slid a bit, but then sprung back after the

Fed announced there would be no change in interest rates and no change in its inflation outlook. There was a minority opinion that the Fed would move to an opinion that showed no further interest rate increases would be likely. Instead, the Fed said inflation still poses a threat to the economy.

The benchmark 10-year

Treasury note was up 9/32 before the announcement. It lately was at 100 6/32, up 11/32, to yield 5.725%.

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