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Dow Jones Industrial Average spent the morning deciding which side of the break-even line it prefers, while the

Nasdaq Composite Index just spent it heading lower. Pushed by weakness in the chip sector, the tech heavy index lately bounced off a low around 3280.

Downgrades this morning on semiconductor stocks






from both

Salomon Smith Barney


Lehman Brothers

made them the two most active stocks on the Nasdaq. And they headed in only one direction -- down. Xilinx was lately off 28.2%, while Altera was 25.8% lower.

Those downgrades were choking the

Philadelphia Stock Exchange Semiconductor Index

, known as the SOX, sinking it 11.5%.

Applied Materials


was down 10.8%.



lost 9.2%.

Linear Technology


was off 11.3%.

Lattice Semiconductor


dropped 12% and National Semiconductor


tumbled 11.5%. That hurts.




, a biopharmaceutical company that makes health care products, is scheduled to report earnings today. Biogen was lately 6.7% lower, but the

Nasdaq Biotechnology Index

was up almost 2%.

For the Nasdaq, the outlook doesn't seem bright. "The pattern is becoming more and more defined. Investors look like they want to take down exposure in Nasdaq," said Jon Olesky, head of block trading at Morgan Stanley Dean Witter.

Look to












for evidence. The tech heavyweights, which have all dropped lately, were all weighing down the Nasdaq today.

One of the

NYSE's worst performers today has been

Morgan Stanley Dean Witter


. After an abysmal few weeks, the stock continued to get walloped.

The stock was recently down 12.1% to $73 and it was also pulling down the

American Stock Exchange Broker/Dealer Index

, which was recently off 3.6%.

Other areas giving investors the willies are the Middle East and oil prices. Cold weather and escalating tensions pushed oil prices about 65 cents higher overnight. The market is sensitive to oil because of its impact on inflation (as oil prices rise, they can easily pull the prices of other goods and services higher too), consumer spending (that's right, if you're paying more at the pump, you won't have as much money left over to buy other things) and, most of all, earnings (companies get hit by higher energy costs because, among other things, they have to pay more for their fuel costs).

Market Internals

Breadth was negative on moderate volume.

New York Stock Exchange: 1,167 advancers, 1,479 decliners, 552.3 million shares. 23 new 52-week highs, 68 new lows.

Nasdaq Stock Market: 1,304 advancers, 2,308 decliners, 964.3 million shares. 15 new highs, 178 new lows.

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Most Active Stocks

NYSE Most Actives

  • Motorola (MOT) : 11.5 million shares.
  • Nokia (NOK) : 11.2 million shares.
  • Nortel (NT) : 10.4 million shares.

Nasdaq Most Actives

  • Altera: 44.1 million shares.
  • Xilinx: 35.3 million shares.
  • Intel: 34.9 million shares.

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Sector Watch

The latest rise in oil prices was boosting related sectors. The

American Stock Exchange Oil & Gas Index

was up 2.5%. The

American Stock Exchange Natural Gas Index

was 3.5% higher and the

Philadelphia Stock Exchange Oil Service Index

rose 2.8%.

That news also pushed up the

Dow Jones Utility Average

1.3%. Components

Peco Energy





, parent of Chicago utility

Commonwealth Edison

, were the sector's wealthiest contributors.


Philadelphia Stock Exchange Computer Box Maker Index

was off 3%, with every component in the red.



was down 3% after it announced that it would spend $2.5 billion to build an advanced chipmaking plant in New York as part of its $5 billion expansion plan.

Financials were down. The

Philadelphia Stock Exchange/KBW Bank Index

lost 3.9%.

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Bond prices reversed direction as the stock market tumbled today. There are no major economic releases today.

The benchmark 10-year

Treasury note lately was up 1/32 to 99 16/32, dropping its yield to 5.814%.

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European stocks were mixed at the close.


FTSE 100

was down 17.10 to 6247.70.


CAC 40

in Paris was up 33.24 to 6143.30, while the

Xetra Dax

in Frankfurt ended off 15.66 to 6665.12.

The euro was lately trading at 0.8694.

The major

Asian equity markets tripped lower overnight.

Returning from a long holiday weekend, Japan's equity markets finished lower Tuesday after one of the country's biggest insurers filed for bankruptcy. The

Nikkei 225

closed down 166.5, or 1%, to 15,827.7.

In Tokyo trading, the dollar fell to 108.51 yen. The greenback was lately trading at 107.81.

Elsewhere, South Korea's


index closed down 0.8 points, or 0.1%, to 588.3 and Hong Kong's

Hang Seng

index fell 157.6, or 1%, to 15,535.9, as heavyweight

China Mobile


continued its 5.5% slide from Monday. The shares fell HK $0.25, or 0.5%, to 55.50 ($7.12).

Taiwan's stock market was closed for a holiday.

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