Publish date:

Today's Market: Dow Lower in Early Trading; Nasdaq Moves into the Green

<LI>SCI Systems issues earnings warning.</LI><LI>BancAmerica, Morgan Stanley bearish on semis.</LI> <LI>Chase and J.P. Morgan fall on merger news.</LI>

(Updated from 9:39 a.m.)

Red was the color of the open. What initially looked like a tech stock bounce fell apart after an earnings warning from electronics-componet maker

SCI Systems

(SCI) - Get Report

and negative comments on semiconductors from



Morgan Stanley Dean Witter



Dow Jones Industrial Average was lately 21 lower to 11,212. The

Nasdaq Composite Index, which was lower in early trading, was lately up 31 to 3881. And the

S&P 500 lately moved 2 higher to 1484.

Chase Manhattan's


$33.2 billion acquisition of

J.P. Morgan

(JPM) - Get Report

will continue to be a big item for today's market. Chase fell $2.81, or 5.3%, to $50 in early trading. It was lately halted. J.P. Morgan fell $7.38, or 4%, to $178.13 in early trading.

Lehman Brothers



Merrill Lynch

, other brokerages considered merger targets, should move on the mega-merger.

wrote an article about the

details of the deal and a sperate article that analyzes what the merger means for the


The bad-news bear in tech was: Electrical-component maker SCI Systems cited weakness in consumer electronics and the end of PC demand. SCI was lately off 27.7%. Meanwhile, according to's

sister site,

, BancAmerica was issuing negative comments on semiconductors, and Morgan Stanley observed pressure on DRAM chips, considered a commodity.

Merrill Lynch, meanwhile, was reeling out good news for tech. The company started chip-maker

DSP Group


with a buy this morning and said it sees



third-quarter earnings on track to meet estimates.

The downward pressure on the market and large intraday swings in recent action is largely attributable to earnings jitters. Several companies have already warned of slower earnings at the beginning of this pre-announcement season, and concerns over slowing semiconductor demand, weakness in the Euro and soaring oil prices have not abated.

It is also attributable to the fact that many summer vacationers have returned.

"These swings reflect the fact that more players are back in the market," said Brad Benshop, VP of CME Equities at

JP Morgan Futures

. "Obviously, not everyone agrees on what is going on. It's better than July and August, when everyone was complaining there were no swings because there was no volume," he added.

Investors are quick to abandon stocks that look like they might have slower earnings. Yesterday,




PRI Automation


took the most heat in that department.

TheStreet Recommends

Meanwhile, a couple of companies warned late yesterday that they would miss earnings estimates for the coming quarter: packaging company



and pharmaceutical company

Watson Pharmaceuticals


. Blue-chip industrial


(HON) - Get Report

, on the other hand, said its earnings will meet estimates.

Investors may want to play it safe today, anyway. Retail sales numbers are released tomorrow morning and they will be closely watched -- a decelerating economy has fanned fears of slowing consumer demand. And tech investors are likely holding their breath a little ahead of software-maker


(ORCL) - Get Report

fiscal first-quarter earnings, to be released tomorrow after the close.

"Oracle is the first big one. It will be in the back of everyone's minds," Benshop said.

Elsewhere in the news, antitrust authorities may force

America Online


to open its instant messaging services to competitors,

The Wall Street Journal




(F) - Get Report

investors are worried the company will suspend any stock buyback plans it might have due to bad publicity from the Bridgestone/Firestone tire scandal,

The Wall Street Journal


Elsewhere in financials,

ING Groep

said it will sell 120 shares in rival

ABN Amro Holding

to raise $2.75 billion for acquisitions.

Back to top


The 10-year Treasury note was lately up 8/32 at 100 1/32, and yielding 5.745%.

Yesterday, treasuries remained flat in high-volume trading.

Back to top


Techs and telecoms were dragging on

European markets this morning after the Nasdaq lost almost 50 points yesterday.


FTSE 100

was lately 82.70 lower to 6472.80.

Across the channel, the

CAC 40

in Paris was off 115.13 to 6582.67, and the

Xetra Dax

in Frankfurt was off 128.41 to 7007.34.

The embattled euro was lately trading higher at $0.8658.

Tokyo stocks rose overnight after two days of losses, while markets in Korea and Hong Kong were closed for a national holiday.

Japanese shares climbed higher after mutual and pension fund managers vigorously picked up selected technology shares in an otherwise lethargic trading day. The

Nikkei 225

index rose 150.29 to close at 16,190.52,

The greenback slowly inched higher against the yen and closed at 106.97 in Tokyo trading. The dollar was lately trading at 107.25 yen.

Back to top