Market Update: Stocks Weaken as Memories of Rally Fade - TheStreet

Market Update: Stocks Weaken as Memories of Rally Fade

<LI>Bank of America issues earnings warning and drags financials down.</LI> <LI>Intel ails after Solly issues negative report.</LI>
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Hip! Hip! Oh, man.

The major indices were so excited to get some kind of encouraging news that yesterday they overindulged in celebrating Fed chairman

Greenspan's comments. Today, they were out to correct themselves.

The teach-heavy

Nasdaq was continuing its downward slide after some earlier signs of optimism, while the blue-chip

Dow was offering up about two-thirds of the gains it made yesterday.

Reality set in after the closing bell last night, when computer maker

Apple

(AAPL) - Get Report

issued an

earnings warning. Apple said it expects to

miss -- really miss -- its fiscal first-quarter sales and earnings targets. As is usually the case, analysts came out to cut their ratings of the company.

Bear Stearns

,

Lehman Brothers

and

Credit Suisse First Boston

all got in on the action.

And if Apple's bad news wasn't enough to hurt PC-makers

Gateway

(GTW)

and

Compaq

(CPQ)

, a negative note from CSFB, surely did the trick.

Giving a further drag to tech was a crummy note issued about

Intel

(INTC) - Get Report

from

Salomon Smith Barney

that reiterated its recent lowering of earnings and revenue. Solly's Jonathan Joseph

today wrote, "All our inputs suggest Intel's Q4 is shaping up to be its worst quarter in over a decade." Intel was lately 10.2% lower.

Juniper Networks

(JNPR) - Get Report

was inflicting great pain upon the Nasdaq. In recent trading, the stock was sinking 9.1%. Today, its partner in a mobile Internet network joint venture, Finnish mobile phonemaker

Ericsson

(ERICY)

, said it was selling 10.4 million shares of its Juniper stock that it bought before Juniper's initial public offering in June 1999.

Still, there were some tech-heavyweights trying to slow down the selloff. Those working against the naysayers were

Qualcomm

(QCOM) - Get Report

,

Inktomi

(INKT)

and

Applied Micro Circuits

(AMCC)

.

The Dow, however, couldn't even get a rally started today and in recent trading was giving back a pretty good-sized chunk of the gains it made yesterday.

The blue-chip index had been getting help from

J.P. Morgan

(JPM) - Get Report

. It and other interest-rate-dependent financial companies were bouncing big yesterday and earlier today on

Greenspan's comments. But then came an

earnings warning this afternoon from

Bank of America

(BAC) - Get Report

and the bank stocks went scrambling lower.

Bank of America was 10.9% lower after it said fourth-quarter earnings should come in between 85 cents and 90 cents, well below the

First Call/Thomson Financial

26-analyst estimate of $1.17 a share for the quarter. Last month, it was

revealed that the bank would suffer because of a problem $1.7 billion loan the bank and several other institutions made to troubled consumer products maker

Sunbeam

(SOC)

.

Elsewhere on the

Big Board,

Home Depot

(HD) - Get Report

was fighting the drag, and was up on news that it picked up former

GE

(GE) - Get Report

exec Robert Nardelli as its

new CEO.

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Sector Watch

Oil-related sectors were falling again today as oil prices continue to tumble, hitting prices not seen since early August. The

American Stock Exchange Oil & Gas Index

was 2.2% lower, while the

Philadelphia Stock Exchange Oil Service Index

was off 1.2%. Blue-chip

ExxonMobil

(XOM) - Get Report

, the country's largest oil company, lately was down 2.8%.

TheStreet.com Internet Sector

index, or

DOT, was sliding after enjoying some lift yesterday.

Macromedia

(MACR)

,

eBay

(EBAY) - Get Report

and

Yahoo!

(YHOO)

were its biggest drags. Today, it was announced that Yahoo! was looking for a new exec to head up sales to help push up its sagging ad revenue.

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Bonds/Economy

Treasuries are getting a lift from the downturn in stock prices. The rally is pushing yields down to new lows for the year.

The benchmark 10-year

Treasury note lately was up 26/32 at 103 6/32, dropping its yield to a new low of the year at 5.324%.

Falling stock prices increase the appeal of bonds as an alternative investment and indicate waning confidence in the economy, calling for lower interest rates and higher bond prices.

Treasuries yesterday staged a huge rally in response to remarks by

Fed Chairman

Alan Greenspan, in which he acknowledged that the economy is at risk of slowing too much. Presumably, the Fed will lower interest rates in the next several months to keep that from happening.

Today's economic data, while not market-moving, is marginally negative for Treasuries. Mortgage activity increased, according to the

Mortgage Applications Survey

(

definition |

chart |

source

), forecasting increased consumer activity generally. And third-quarter

productivity and unit labor costs

(

definition |

chart |

source

) were revised lower and higher, respectively.

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