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Market Update: Tech Holds Gains, Dow Slips on Oil, Euro Concerns

<LI>Cobalt soaring on Sun Microsystem's planned buy.</LI><LI>Computer network supply sector attracting bargain hunters today.</LI><LI>AIG's heir apparent apparently wasn't.</LI>

Technology stocks were holding on to the gains they made out of the gate today, while blue-chips succumbed to worries about soaring oil prices and euro weakness.


Dow Jones Industrial Average was lately flipping near the break-even point, down 17 to 10,792, while the

Nasdaq Composite Index was holding on to its early vigor, up 70 to 3797.

Earlier, it looked like oil and euro threats could also deflate a tech bounce, and while that is still possible, tech is doing a good job of shaking off those concerns right now.

On the Nasdaq,



was flying 34.2% after

Sun Microsystems

(SUNW) - Get Report

agreed to buy it in a $2 billion stock deal. Cobalt supplies server-appliance products.

Juniper Networks

(JNPR) - Get Report

was also on the rise, lately up 7.8%, as the network supply sector attracted bargain hunters today. The sector tumbled yesterday on fears of a spending slowdown among major telecoms.

Meanwhile, much of the market was grappling with earnings pre-announcement data. The combination of a slowing economy, rising fuel prices, a depressed euro and concerns over declining demand for semiconductors and PCs has created a veritable battlefield for stocks lately. The pre-announcement season kicked off last week and should last until the end of September, and investors have been quick to punish companies that warn of earnings weakness. Between Friday and Monday's action, the Nasdaq plummeted 187 to 3727, while the Dow gave up 279 to 10,809.

In company news, online book retailer

Barnes &


was one of the Nasdaq's most active stocks after announcing a marketing deal with



this morning. The bookseller was lately up 30% to $5.94, while Yahoo! was 1.6% higher to $106.69.


(INTC) - Get Report

, which was getting a powerful boost from a

Banc of America

upgrade this morning, was adding 17.4 points of upside to the Dow.

J.P. Morgan

(JPM) - Get Report

was also doing its part, lately up 1% and contributing 9.6 points to the Dow.

J.P. Morgan was rising along with the rest of the brokerage stocks after

Goldman Sachs

(GS) - Get Report

reported earnings 11 cents better than analysts' estimates.

Also this morning, insurance giant

TheStreet Recommends

American International Group

(AIG) - Get Report

COO and President Evan Greenberg unexpectedly resigned. Greenberg had been expected to become the company's new CEO when his father, Maurice Greenberg, stepped down. Evan Greenberg said of his decision only that he would be "pursuing other interests." AIG shares rose 1.8% on the news.

In the world of blue-chip industrials, Dow component


(AA) - Get Report

was oil's first victim today. The company issued a profit warning Monday after the close, citing higher energy costs and softening markets. Alcoa was off 5.8% to $25.44.

wrote about Alcoa in a

separate article. Despite the news,

Merrill Lynch

reaffirmed its buy rating on the stock this morning, saying the stock is significantly undervalued at current prices.

Lehman Brothers

also stepped up to defend the stock, saying any weakness is a long-term buying opportunity.

Diversified manufacturer


(IR) - Get Report

also warned that it sees lower-than-expected 2000 results due to a weaker euro and slower demand for infrastructure-related equipment. The company's shares were lower in off-hours action, and the stock was getting hit today, off 11.2% to $35.31.

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Sector Watch

Following the Intel upgrade, semiconductor stocks were soaring, with the

Philadelphia Stock Exchange Semiconductor Index

lately up 4.7%.

Oil stocks hit a bump in the road after continuing 10-year highs in oil prices had generated an incredible run. The

American Stock Exchange Oil & Gas Index

was lately down 2.1% to 539, while the

American Stock Exchange Natural Gas Index

was down 3% to 227.

Brokerage stocks were getting a bounce from Goldman Sachs earnings, with the

American Stock Exchange Broker/Dealer Index

up 1.6%.

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The trend that took hold in the Treasury market in the last week -- long-term yields rising while short-term yields hold steady -- was on hold for today.

In the last several trading sessions, long-term Treasuries have fallen in price so much that the 30-year bond's yield finds itself higher than the 10- and five-year note yields for the first time since January. The shift has been driven mainly by the belief that the

Fed is unlikely to hike interest rates again.

But the shift was so sudden and violent that market participants are not surprised to see it pause for a day. After all, anyone who has simultaneously owned short-term Treasuries and been short long-term Treasuries over the last week was sitting on a fat profit, and could reasonably have been expected to close out those positions by selling the short-term issues and buying back the long-term ones.

The benchmark 10-year Treasury note lately was flat at 99 3/32, yielding 5.871%. But the 30-year Treasury snapped a three-session losing streak, and lately was about a quarter-point higher.

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