The market stuck to its trend of starting out in a rally and nosediving into a poorly tended pool. You know the kind -- there's that green stuff floating on top, a dead frog stuck in the filter and the water smells like the

New Jersey Turnpike

.

A somewhat surprising September's jobs report came out this morning, showing some expansion in the labor market (for more on the

employment report check out the separate story by

TheStreet.com/NYTimes.com joint newsroom

). The number scared the Street a bit this morning, but not enough to do the damage the market sustained today -- at least, not by itself.

Nope, it got some help from a couple weeks of earnings warnings smothered with some hard-hitting rumors concerning brokerages.

Let's start with that last part first.

Hardest hit were the brokerages, which took a dive on concerns of margin calls and chatter over rumored losses on junk bond trading desks. They're rumored to be sitting on large amounts of money-losing debt. The concern among investors would be that trading-related losses would hurt revenues of the big brokerages.

TheStreet.com

talked about

one brokerage's denial of the rumors in a separate story.

Bill Schneider, head of U.S. equity block trading at

UBS Warburg

, said, "There were a lot of rumors in brokerage stocks, but they were also ripe for a selloff given all of the recent takeover news."

No matter what the reason, significant losses were witnessed today in shares of

Morgan Stanley Dean Witter

(MWD)

, down 8.4%;

Bear Stearns

(BSC)

, off 8%; and

Lehman Brothers

(LEH)

, 4.9% lower. The

American Stock Exchange Broker/Dealer Index

was off 5.5%. The banks dropped in sympathy; the

Philadelphia Stock Exchange/KBW Bank Index

lost 3.6%.

And although financials are usually leaders in rallies, Schneider said the market will be better off when tech stocks get back into the game.

"Tech stocks are probably more important to the market's psyche," Schneider said. "We need techs to stabilize to have a sustainable rally."

Still, the recent malaise in the technology sector continues, but those concerns are largely macro and related to an apparent reduction in demand for semiconductors and telecommunications equipment. After an earnings warning from

Veeco Instruments

(VECO) - Get Report

, that stock was down $34.97, or 34.1%, to $67.56.

Most tech-heavyweights were down, including

Cisco

(CSCO) - Get Report

,

eBay

(EBAY) - Get Report

,

Oracle

(ORCL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

.

Dell

(DELL) - Get Report

, which issued a revenue warning earlier this week, managed to finish on the upside today. It was up 13 cents to $25.31.

Dow component

Intel

(INTC) - Get Report

took away almost 7 points from the index. However,

J.P. Morgan

(JPM) - Get Report

was the Dow's heaviest drag, taking away about 36 points. It was followed by other financials,

American Express

(AXP) - Get Report

and

Citigroup

(C) - Get Report

.

Meanwhile, the

S&P Retail Index

fell 2.5% after

Lowe's Companies

(LOW) - Get Report

disclosed that same-store sales for the third quarter would fall short of expectations. The stock was down 3.1%.

Other big retailers got hurt on the news, including Dow component

Home Depot

(HD) - Get Report

, off 5%.

Schneider said for next week the only thing that might be able to kick momentum into gear is some good earnings news.

Today's jobs report cannot help the situation. A number of traders expressed the view today that the market, by and large, was expecting some relief from the

Federal Reserve

, in the form of a modification of the committee's policy statement to indicate that they're less worried about rising inflation. They got no such relief from the Fed Tuesday, when the Fed indicated that the economic risks still lean toward higher inflation.

Market Internals

Breadth was horrific on strong volume.

New York Stock Exchange: 857 advancers, 1,975 decliners, 1.15 billion shares. 44 new 52-week highs, 118 new lows.

Nasdaq Stock Market: 1,084 advancers, 2,896 decliners, 1.83 billion shares. 25 new highs, 348 new lows.

Back to top

Most Active Stocks

NYSE Most Actives

  • AT&T (T) - Get Report: 25.3 million shares.
  • Nortel (NT) : 26.3 million shares.
  • America Online (AOL) : 15.4 million shares.

Nasdaq Most Actives

  • Intel: 68.5 million shares.
  • Cisco: 54 million shares.
  • Dell: 48.2 million shares.

Back to top

Sector Watch

Aside from the aforementioned financial sectors, Internet stocks were among today's hardest hit.

priceline.com

(PCLN)

, which has been massacred in the last few days after announcing it would shutter its on-line grocery business, was down 4.3%.

Yahoo!

(YHOO)

lost 4%, and

TheStreet.com Internet Sector

index was off 5.3%.

TheStreet.com E-Commerce Index

plunged 6.7%.

Digital River

(DRIV) - Get Report

,

BroadVision

(BVSN) - Get Report

and

Ameritrade

(AMTD) - Get Report

were a couple of the components that got socked.

Back to top

Bonds/Economy

Bonds have recovered to post significant gains thanks to the weakness in stocks. Falling stock prices are seen as a leading indicator of economic activity. They also make bonds more appealing as an alternative investment.

Earlier, bond prices fell as investors conclude that the September

employment report

(

definition |

chart |

source

) makes the

Fed less likely to ease up on interest rates in the near future.

The September jobs report measured a decline in the unemployment rate to 3.9% -- matching the 30-year low it hit in April -- from 4.1% in August. A low unemployment rate is a key indicator of a healthy economy, one that does not require assistance from the Fed in the form of easier monetary policy.

Also indicating that the economy is strong, the employment report counted 252,000 new nonfarm jobs in September. Netting out the loss of 27,000 temporary Census jobs and the return of 75,000 strikers, the underlying increase was 204,000, in line with the recent trend. A shift in monetary policy is unlikely to occur unless there is a pronounced slowdown in the pace of job-creation.

The benchmark 10-year

Treasury note lately was up 8/32 to 99 15/32, yielding 5.821%.

Back to top

International

European stocks were mixed following this morning's U.S. employment report.

In London, the

FTSE 100

ended the day up 9.2 to 6391.2.

Across the channel, the

CAC 40

in Paris was down 76.71 to 6258.41, while the

Xetra Dax

in Frankfurt was off 116.1 to 6776.4.

The euro was squeezing out some slim gains, lately trading at 0.8678.

TheStreet.com

recently looked at what

ails the euro.

Amid a powerful earthquake in Japan and government-supported buying in Taiwan,

Asia's major stock markets closed out the week Friday on a mixed note.

Japan's financial markets largely ignored a strong tremor in the Western part of the country, as trade remained lethargic ahead of a three-day weekend. The

Nikkei 225

closed down 105.0, or 0.7%, to 15,994.2.

In Tokyo currency trading, the dollar was little changed against at 109.40 yen. It was lately trading at 108.79.

Taiwan's

TWSE

index surged 324.0, or 5.4%, to 6353.7, as the government continued to support the market with buying from its $16 billion stabilization fund. The country's equity market has been wracked by political uncertainty in the country this week.

South Korea's

Kospi

index closed up 2.1 points, or 0.3%, to 608.9, and Hong Kong's

Hang Seng

index was closed for a holiday.

Back to top