Woe is

Cisco

(CSCO) - Get Report

and the tech-laden

Nasdaq.

The networking giant's

unexpected bad news last night threw the Nasdaq for a loop, wreaking havoc on plenty of stocks, especially Cisco's competitors and customers.

Networking stocks, including

Juniper

(JNPR) - Get Report

,

Network Appliance

(NTAP) - Get Report

and

Sycamore

(SCMR)

, were being flattened on word that Cisco missed earnings targets and would have a hard time with future business.

Also in the line of fire were such customers as

Jabil

(JBL) - Get Report

,

Flextronics

(FLEX) - Get Report

,

Solectron

(SLR)

and

Celestica

(CLS) - Get Report

. These firms do outsourcing work.

Last week, Cisco CEO John Chambers had said his company had a more

difficult last quarter than expected. Investors weren't paying attention, instead they banked on the pattern the company had developed in the couple years in which they beat estimates by a penny and yesterday sent the stock up ahead of the earnings release. Cisco was off 13.6%.

There wasn't much good news on the Nasdaq, but one bright spot was

PacifiCare Health

(PHSY)

. The managed care company beat estimates and was handsomely rewarded with a bounce. Lately, it was skipping 28.8%.

The

Dow Jones Industrial Average has had a fairly volatile day, but has managed to stay on the upside. The pressure point was

General Motors

(GM) - Get Report

, but not because of typical problems in the auto industry. Instead, it was getting socked by a report that its spinoff

Hughes

(GMH)

would likely be acquired by Rupert Murdoch's

News Corp.

(NWS) - Get Report

. News Corp. wants Hughes for DirecTV, the largest satellite television provider in the U.S. Reports put the value of Hughes at $45 billion, but investors weren't happy with the news. Hughes was down 9.4%. GM was off 3.8%.

Old Economy stocks were mostly en vogue today. Diversified manufacturer and maker of Post-It notes and Scotch tape,

3M

(MMM) - Get Report

, was getting a nice bounce in a bit of a flight to quality. The stock was 0.8%.

Eastman Kodak

(EK)

was also higher.

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Market Internals

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Sector Watch

TheStreet.com Internet Sector Index

, aka the

DOT, was down 4%. If you live in a cave, you might not have heard about how the dot-com rage has gone bust -- and nearly everyday another one bites the dust. That doesn't mean there aren't some still working their way to profitability or at least trying to.

Amazon.com

(AMZN) - Get Report

, the grandfather of the group, is going to start charging publishers as much as $10,000 a book title to get a recommendation from the e-tailer. Earlier this week,

Lehman Brothers

urged investors to continue to avoid the online retailer's convertible bonds, saying that without additional infusions, the company's working capital could fall below zero. The stock was down 5.1%.

Cisco's reach was far and wide. Battered chip stocks were falling. And telelecommunications stocks were also lower.

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Bonds/Economy

Treasury prices are down slightly from their closing levels yesterday. Bonds are seeing some "safe haven" buying right now, as equities fall in the aftermath of the weak earnings announcement from Cisco.

Traders are also awaiting an $11 billion auction of 10-year notes this afternoon before they make bigger moves. Economic data released this morning may not do the money market any favors -- private real estate activity remains strong and last quarter's productivity was surprisingly high.

The benchmark 10-year

Treasury note lately was down 1/32 to 104 5/32, raising its yield to 5.189%.

In economic news, the

Mortgage Applications Survey

(

definition |

chart |

source

) showed that home purchasing and refinancing activities increased after having dropped during the previous week. The Purchase Index rose to 311.5 from 298.1 in the week ended Feb. 2, while the Refinancing Index rose to 2612.5 from 1992.1. Both indices are calculated from their base values of 100 beginning in 1990.

Low mortgage rates are the reason home-seekers are so active and homeowners are readjusting the financing on their properties. But this strength in real estate has broader implications. Analysts have noted that a recession cannot be possible as long as mortgage activity retains its current good health. Past data have shown that cash freed up by more favorable mortgage terms is often channeled toward consumer purchases.

The report on

productivity and unit labor costs

(

definition |

chart |

source

) showed that productivity of nonfarm workers in the U.S. grew at a rate of 2.4% in the fourth quarter of 2000, down from 3% in the third quarter. Economists polled by

Reuters

had forecast a rate of 2%. Annual productivity grew at 4.3%, its best showing since a 4.5% spurt in 1983. Unit labor costs, meanwhile, were up sharply in the fourth quarter: They rose by 4.1% -- almost a percentage point higher than the forecast growth of 3.3%.

Productivity, which is measured by hourly output, enables companies to turn out more goods at lower cost. Market watchers will be hoping that the unexpectedly high labor costs were due to seasonal factors like shortage of available labor over the holidays, since this measure is directly proportional to inflation.

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International

Stocks in Europe were lower, in part on the Cisco news. Also,

France Telecom

(FTE)

said it is cutting the valuation of its

initial public offering for its mobile phone group. The

FTSE

in London was down 68 to 6226. Over on the mainland, Paris'

CAC-40

lost 100 to 5752 and the still-rallying German

Dax

was falling 82 to 6611.

Asian markets, however, finished higher. The

Hang Seng

closed up 136.23, or 0.9%, to 16049.47 and the

Nikkei 225

gained 96.16, or 0.7%, to 3366.01.

The dollar was falling against the euro, lately trading at $0.9333.

The yen was lurching lower against the yen following the release of a disappointing business sentiment index. The dollar was lately trading at 116.13 yen.

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