Today's Market: Indices Creep Up Despite Low Volume at Midday

<LI>Lucent announcement of revenue problem tanks stock.</LI><LI>Opticals drive up Nasdaq, anyway.</LI><LI>Petroleum sectors doing well.</LI>
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Cheap. Cheap. The crickets chirped quite loudly at midday as investors lightly picked over the Nasdaq bargain bin on super thin volume. And despite the fact that the presidential election is now two weeks old, there's no end in sight.

It's lunchtime in New York, and as people on Wall Street nibbled on overpriced sandwiches, both the

Dow Jones Industrial Average and

Nasdaq Composite Index were slowly climbing up from the negative trend that hit after early opening strength. Moves have been relatively light as markets absorb news from

Florida's Supreme Court

, which said that it did not have a timetable on handing down a ruling over whether to accept the manual hand court.

And you know what that means! Markets don't like uncertainty!

"The mood is not good. Nobody wants to get involved in the markets," said Michael Lyons, senior trader with

Morgan Stanley Dean Witter

. "People are just fed up. And over the last few days, buyers have just left. There was practically a buyer's strike out there."

Not every buyer took today off. One day after the Dow dipped close to 2% and the Comp closed below 2900 for the first time in well over a year, the Dow was up moderately over the flatline, and the Comp was, too. But activity was pretty light overall, and Lyons said this morning's bounce was "unconvincing."

"Every day, it seems like there's another problem falling from the sky," he said. "Today, it was

Lucent

(LU)

."

Today, Lucent announced that it had identified a "revenue recognition issue," which affects $125 million in revenue for its fourth quarter. This represents a 2 cent per share impact on the fourth quarter, which was previously announced to come in at 18 cents a share.

The issue was discovered as the company was wrapping its fiscal year. Lucent Chief Executive and Chairman Henry Schacht, who just replaced ousted CEO Rich McGinn about a month ago, said the following in a press release this morning. "We wanted to make this public as soon as we discovered the issue. I have asked our outside auditor and our outside counsel to assist us in doing a complete review of this and any related issues. We have also informed the

Securities and Exchange Commission

of our efforts."

Lucent's blood-red logo is especially apt this year, since the company has put itself into a circle of pain after guiding estimates lower four straight times while missing earnings forecasts all over the place. And today Lucent was falling $3.13, or 15%, to $17.75, hitting a 52-week-low in the process.

The Lucent news was self-contained, as opticals were the primary force driving the Nasdaq's slim gain.

Ciena

(CIEN) - Get Report

,

JDS Uniphase

(JDSU)

and

SDL

(SDLI)

were all making nice upside moves.

On the Dow, the blue-chips were making moderate moves, with few outstanding winners and losers. Things were tentative while

Boeing

(BA) - Get Report

,

3M

(MMM) - Get Report

,

Merck

(MRK) - Get Report

and

ExxonMobil

(XOM) - Get Report

led stocks to the upside.

IBM

(IBM) - Get Report

,

J.P. Morgan

(JPM) - Get Report

and

Procter & Gamble

(PG) - Get Report

led the losers.

Nontechnology stocks were flourishing, especially the petroleum sectors, which were much higher as the thought of a long, cold winter warmed business prospects. The

American Stock Exchange Natural Gas Index

was rising 1.3%, while the

American Stock Exchange Oil Index

was lately up 1.7%.

So, when will this end? When will volume pick up, buyers return and conditions improve? Well, don't count on the elections to help bail things out this year, said Lyons, the Morgan trader.

"We're running into the end of the year," he said. "You'll get a bounce, but it may be short-lived. You're going to have a lot of year-end short covering and portfolio adjustments. There is cash on the sidelines, which may come into play, but it'll be the beginning of the year before we see a true rally."

But for the time being, Lyons, and the markets on the whole, were clinging to their tentative bias.

"You're almost afraid to stick your neck out in this market for fear you'll get your head cut off."

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Market Internals

Really, is anyone going to work this week? Where are the traders? Where are the trades? What ever happened to the volume? Trading continued to be anemic, while internals were leaning towards "crummy."

New York Stock Exchange: 1,196 advancers, 1,429 decliners, 554 million shares. 38 new 52-week highs, 83 new lows.

Nasdaq Stock Market: 1,280 advancers, 2,264 decliners, 861 million shares. 20 new highs, 281 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent: 33.8 million shares.
  • Nortel (NT) : 17.1 million shares.
  • AT&T (T) - Get Report: 12.1 million shares.

Nasdaq Most Actives

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Sector Watch

As rapper Phife Dawg from

A Tribe Called Quest

would have put it -- chipmakers get an "E" for nice effort and "T" for nice try. As investors put it, they simply get an "F."

Yesterday, the collected components of the

Philadelphia Stock Exchange Semiconductor Index

rallied in the last two hours of trading, reversing 4% losses and posting gains of 2% before watching that effort falter. The SOX, as the semiconductor index is known informally, ended yesterday with a heart-breaking loss.

And today, semis continued to fail as the SOX was dropping 3.7%. Wireless and peripherals weren't improving, either. The

Philadelphia Stock Exchange Wireless Telecom Sector

was dipping 0.6%, while the

American Stock Exchange Disk Drive Index

was dipping 2.1%.

Yes, there are other sectors besides technology. And some of those were doing quite well today. Oil and other commodity-related companies were higher. The

Philadelphia Stock Exchange Oil Service Index

rose 1.2%, while the

Philadelphia Stock Exchange Gold & Silver Index

continued to rally, gaining 2.9%.

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Bonds/Economy

Treasuries are slightly lower on little news. The primary influence on bond prices continues to be the stock market, where selloffs spur buying of Treasuries and rallies trigger selling of Treasuries.

Yesterday's stock-market selloff produced modest gains for Treasuries. Today, stocks are in the green and Treasuries are in the red. The benchmark 10-year

Treasury note lately was down 4/32 at 100 14/32, lifting its yield to 5.689%.

In economic news, the

trade deficit

(

definition |

chart |

source

) swelled to a record $34 billion in September as import growth outpaced export growth. Imports rose 3.1% to $126 billion, while exports fell 0.7% to $92 billion. A much smaller widening had been forecast by economists polled by

Reuters

.

The rising deficit has no clear market implication, but it will probably result in a substantial downward revision to the third-quarter

gross domestic product

(

definition |

chart |

source

) growth rate, which the government will restate next Wednesday. The initial estimate of 2.7% is likely to be revised to 2%, economists at

Barclays Capital

said.

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International

European markets ended with a strong finish after dipping midday. In the U.K., stocks lost some of their earlier strength on news that the U.S. trade gap for September shot to a new record.

In London, the

FTSE 100

closed up 37.1 to 6382.1.

Over on the continent, the

CAC-40

in Paris rose 59.23 to 6081.02 and the

Xetra Dax

, which was still trading in Frankfurt, was up 39.71 to 6649.19.

The beleaguered euro was giving up a bit of recent strength, trading down at $0.8459.

Asian equity markets closed lower overnight.

Tokyo stocks sold off for the fourth straight session after Prime Minister Yoshiro Mori survived a no-confidence vote in parliament, strangling any hopes that a reform-minded government would take power and turn the economy. Hong Kong's blue-chips closed lower on weakness in telecoms and techs.

In Tokyo, the

Nikkei 225

slipped 123.19, or 0.85%, to 14, 408.46.

The greenback was lately trading higher to 110.29 yen.

Hong Kong's

Hang Seng

index slipped 158.36, or 1.03%, to 15,188.3.

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