Eastman Kodak

(EK)

painted the market red today.

An

earnings warning from the blue-chip photography giant helped sink the

Dow Jones Industrial Average. The

Nasdaq was also off, after trading up earlier in the day.

This morning, Eastman Kodak warned that its third-quarter earnings would be down about 20 to 25 cents a share below its previous guidance range of $1.56 to $1.66. The company's chief financial officer, Bob Brust, said the company had expected strong September sales to offset earnings pressures of the rising dollar, increase raw material costs and higher levels of digital investment. But that didn't happen. The warning sparked downgrades from analysts from

PaineWebber

and

Credit Suisse First Boston

.

Kodak was recently losing 21.7% to trade at $46.19.

This is the end of the confession season, when companies issue early warnings about any weakness in their upcoming reports on earnings for the current quarter. Douglas Myers, vice president of Nasdaq trading at

Wachovia Financial

, said investors should be wary of a company that says it had poor sales because of bad weather and inventory problems since management should have accounted for those factors. The rising costs of oil and the weakness of the euro, on the other hand, are more out of management's hands.

TheStreet.com

has been tracking

earnings warnings.

The Nasdaq was in the pits thanks to such heavyweights as

Apple

(AAPL) - Get Report

,

Intel

(INTC) - Get Report

,

Dell

(DELL) - Get Report

and

Cisco

(CSCO) - Get Report

.

Microsoft was flying after the U.S. Supreme Court said the antitrust cases against the software giant should be sent to a lower court. Microsoft was lately up $2.88, or 4.7%, to $64. In a separate story,

TheStreet.com

looked at the news

propelling the stock.

Back to top

Market Internals

Breadth was negative.

New York Stock Exchange: 1,256 advancers, 1,421 decliners, 636 million shares. 68 new 52-week highs, 86 new lows.

Nasdaq Stock Market: 1,346 advancers, 2,413 decliners, 1.0 million shares. 55 new highs, 172 new lows.

Back to top

Most Active Stocks

NYSE Most Actives

  • Lucent (LU) : 15.5 million shares.
  • Motorola (MOT) : 13.1 million shares.
  • Micron (MU) - Get Report: 11.4 million shares.

Nasdaq Most Actives

Back to top

Sector Watch

Energy sectors were on the upswing today, while retailers and financial companies were suffering.

The

American Stock Exchange Natural Gas Index

was up 2.1%, with help from components

Ocean Energy

(OEI)

,

Anadarko Petroleum

(APC) - Get Report

and

Enron Oil & Gas

(EOG) - Get Report

.

The

American Stock Exchange Oil & Gas Index

was 2.1% higher, while the

TST Recommends

Philadelphia Stock Exchange Oil Service Index

was up 2.2%.

A slew of slower sales warnings sent the

S&P Retail Index

down 3.2%.

Dollar General

(DG) - Get Report

and

Wal-Mart

(WMT) - Get Report

were a few of the offenders. And

Guess?

(GES) - Get Report

was being slammed after warning that its third quarter earnings would be below expectations and it said it is cautious about the next two quarters. It was lately trading down $9.81, or 49.5%, to $10.

The

American Stock Exchange Broker/Dealer Index

was off 2%.

And biotech companies were under pressure. The

Nasdaq Biotechnology Index

was lately off 2.7%.

Back to top

Bonds/Economy

The Treasury market is narrowly mixed amid stable oil prices and a stronger-than-expected

Consumer Confidence Index.

After the Clinton administration's decision to release some from the country's emergency stockpile, oil is well off the 10-year highs it hit last week. That's a positive for the bond market. Rising oil prices make bond buyers stingy to the extent that they threaten to lift the inflation rate.

Meanwhile, consumer confidence remains high in spite of the rise in energy prices, indicating that the adverse impact from higher oil prices may be muted. The Consumer Confidence Index rose to 141.9 in September from 140.8 in August. Economists polled by

Reuters

had forecast a smaller rise, to 141.4, on average.

"The reaction of consumers remains a key factor that will determine how recent energy price increases will effect the economy,"

Barclays Capital

economist Henry Willmore wrote recently. "So far it appears that consumers are remaining confident. This will delay and possibly mute the impact of higher oil prices on growth."

The benchmark 10-year

Treasury note lately was up 3/32 to 99 13/32, shifting its yield down to 5.827%.

Back to top

International

Technology stocks were leading European markets lower, following yesterday's late-afternoon sell-off on the Nasdaq. But the major indices had retreated from earlier lows.

The

FTSE 100

was down 0.70%. Across the channel, the

CAC 40

in Paris was off 0.67% and the

Xetra Dax

in Frankfurt was down 0.69%.

The euro got a boost Friday from the

joint intervention by the European Central Bank, the U.S. and Japan. It was lately trading at 0.8799.

Asian markets were mixed overnight. Both Tokyo and Hong Kong stocks were under pressure.

The

Nikkei 225

index shed 64.28, easing to 15,928.62.

The greenback fell against the yen in Tokyo trading to 107.32. The dollar was lately trading at 107.62 yen.

Hong Kong was dominated by worries about the high-debt burden of broadband and telecom operator

Pacific Century Cyberworks

(PCW)

. The key

Hang Seng

index fell 138.10 to 15,290.85 after PCCW fell HK$0.65, or 7%, to 8.65 ($1.11). An Australian newspaper reported that the company's mobile-phone joint venture with

Telstra

may fall through or be renegotiated.

Elsewhere in Asia, Korea's

Kospi

index rose 2.97 to 587.60, while Taiwan's

TWSE

index gained 71.57, or 1.1%, to 6749.03.

Back to top