Today's Market: It's No Joke -- Stocks Looking Lousy at Midday, Dow Down Over 200 - TheStreet

Today's Market: It's No Joke -- Stocks Looking Lousy at Midday, Dow Down Over 200

The Dow is right at its intraday low and earnings warnings, high oil and the battered euro are all to blame
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Stupid joke of the day: What's red and red and red all over?

Exactly.

The stock market is getting it from all sides today, as the major indices are sinking under the weight of decade-high oil prices, a weakened euro and a number of earnings warnings. (Other than that

Mrs. Lincoln, how was the play?)

At last check, just five of the 30 stocks in the

Dow Jones Industrial Average were on the upside, and most of them just barely.

Lately, the Dow was down 208 to 10,582; the

S&P 500 lost 22 to 1438, the

Nasdaq Composite Index fell 43 to 3822 and the

Russell 2000 dropped 3 to 521.

Strategists view this time period, the few weeks heading into earnings season, as a time when bad news unduly affects the market, because its mindset is geared toward accentuating the negative. Higher oil prices contribute to that negative mindset. Despite federal data that shows the rate of inflation remains in check, investors are quite aware that higher fuel costs leave less money for spending and investment by consumers and corporations alike.

"There's some heebie-jeebies on the horizon," said Doug Myers, vice president of equity trading at

IJL Wachovia

. "They keep saying inflation is low, but oil is still on up there."

Predictably, oil and oil service stocks are performing well, as the price of oil was lately trading at $37.50, highest in a decade. The

American Stock Exchange Oil & Gas Index

gained 1.2%, and the

Philadelphia Stock Exchange Oil Service Index

gained 1.6%.

ExxonMobil

(XOM) - Get Report

rose 0.9% and oil service name

Schlumberger

(SLB) - Get Report

gained 2.9%.

Outside of the oil sector, earnings warnings were playing a big part in the weakness in communications stocks today. Long-distance carrier

Sprint

(FON)

said it expects third-quarter earnings of 45 cents to 47 cents a share, lower than the

First Call/Thomson Financial

consensus for 49 cents per share. The stock was down 5.3% to $26.75.

Other telecom companies were dropping today.

Ericsson

(ERICY)

was lately down 5%, and

Motorola

(MOT)

lost 5.1%. Dow component

AT&T

(T) - Get Report

dropped 5.1%.

The major technology sectors were also performing poorly. Over the last two weeks, concerns about an economic slowdown have become more pronounced, and investors have reacted by questioning technology valuations. The Nasdaq's gains in August were quickly erased, and investors are selling in a number of tech industries, including optical communications names like

JDS Uniphase

(JDSU)

, down 3.5% today, and

SDL

(SDLI)

, off 4.3% today.

"We continue to be nervous about earnings going forward," said Art Hogan, market strategist at

Jefferies

. "The catalysts are oil and currency issues, and you throw all that together with a scheduled bad news season and it's just tough."

Especially because the few sectors that had provided leadership have abdicated said leadership. Through this month, the brokerage stocks have been a source of strength -- largely motivated by consolidation and expectations for more consolidation. Trading desk rumors about

Lehman Brothers

(LEH)

perhaps merging with or getting consumed by Canada's

CIBC World Markets

perked up the brokerage sector, but it didn't last.

Morgan Stanley Dean Witter

(MWD)

and

J.P. Morgan

(JPM) - Get Report

bounced early on, but have since been deflated. Lehman itself is still up on the day, as the company reported a 58% gain in profits due to trading operations in its third-quarter earnings report this

morning.

Big-cap tech is also dying on the vine today.

Sun Microsystems

(SUNW) - Get Report

and

Cisco

(CSCO) - Get Report

are both weaker.

Internet stocks, and their relatives, are also off.

TheStreet.com Internet Sector

index is dropping, down 16 to 776.

Market Internals

Breadth was stinky on strong volume.

New York Stock Exchange: 1,026 advancers, 1,564 decliners, 588 million shares. 39 new 52-week highs, 96 new lows.

Nasdaq Stock Market: 1,324 advancers, 2,321 decliners, 918 million shares. 46 new highs, 111 new lows.

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Most Active Stocks

NYSE Most Actives

  • Sprint PCS (PCS) : 17.8 million shares.
  • AT&T: 14.5 million shares.
  • Lucent (LU) : 9.9 million shares.

Nasdaq Most Actives

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Sector Watch

Stocks that count fuel costs as a major part of their monthly bill are getting whacked. The

Dow Jones Transportation Average

was lately off 1.8%, and the

Amex Airline Index

dropped 1.5%.

The

Dow Jones Utility Average

continued to lose, dropping 1.5%.

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Bonds/Economy

Bond prices are falling as oil has resumed its record-setting climb. Continuing the recent trend, long-term yields are rising more than short-term ones, indicating that bond investors are worried about faster inflation as a result of rising energy prices.

With oil trading over $37.50 a barrel for the first time in 10 years, the benchmark 10-year Treasury note lately was down 5/32 at 99, lifting its yield to 5.882%. The 30-year bond was faring worse, lately down 19/32 at 104 3/32, boosting its yield to 5.95%.

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International

European markets were in bad shape at the end of the day.

The

FTSE 100

ended down 123.60 to 6279.9, a 1.9% decline.

Across the channel, the

CAC 40

in Paris ended down 124.52 to 6405.43, and the

Xetra Dax

in Frankfurt was down 118.09 to 6819.65.

The euro was still losing ground, down $0.8472.

Asian markets traded higher overnight.

A late-day rally in selected technology shares helped nudge key Japanese indices a hair higher Tuesday. But the buying continued to be countered by selling from institutional investors that shed blue-chips ahead of book closings for the fiscal first half.

The

Nikkei 225

index rose 63.03 to close at 16,124.19.

Hong Kong's

Hang Seng

index rose 117.04 to close at 15,677.20, reversing the ugly 4% drop recorded yesterday. A bout of short-covering in the futures market, along with property shares rallying helped sentiment today.

Cheung Kong

rose HK$2.50, or 2.7%, to 94.25 ($12.09), while

Sun Hung Kai Properties

climbed 2.25, or 3.5%, to 66.75.

Korea's

Kospi

index declined for the ninth straight session, closing down 6.39, or 1.1%, at 571.17. Investors are still fleeing the market on worries over slowing corporate restructuring. Taiwan's

TWSE

index also fell 175.24, or 2.5%, to end at 6734.90.

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