(Updated from 9:39 a.m.)

A new round of earnings warnings hit the market this morning. Imaging company and

Dow Jones Industrial Average component

Eastman Kodak

(EK)

and printing firm

Lexmark International

(LXK)

both warned of third-quarter profit shortfalls.

Stocks opened mixed following yesterday's late afternoon sell-off.

The

Dow Jones Industrial Average was lately 68 lower to 10,740. The

Nasdaq Composite Index was up 4 to 3745. And the

S&P 500 gained to 3 to 1442.

"Kodak and Lexmark's warnings certainly aren't going to help," said Jim Benning, a trader at

BT Brokerage

. "I don't think it's going to have an awful performance," he said of the market. "We did get knocked down pretty bad in the past two weeks. If anything, we might see techs start to do a little better. They have been knocked down pretty substantially. Over next few days, I'd expect them to rally."

Eastman Kodak said this morning that it expects to fall short of analysts' third-quarter earnings estimates by 20 cents to 25 cents per share because of a sales shortfall in September. The company said that if the world economy continues to slow, it may have to revise its fourth-quarter estimates downward as well. Analysts were starting to jump on the news --

Credit Suisse First Boston

this morning downgraded Kodak to buy from strong buy.

TheStreet.com

took a look at

Kodak's warning in a separate story. In early trading, it fell $9.75, or 16.5%, to $49.25.

After the close yesterday, Lexmark blamed its warning on slow demand for inkjet cartridges and a weak euro -- and it got burned in after-hours trading. Analysts were quick to downgrade the stock -- after the fact -- this morning. Credit Suisse First Boston lowered the company's third-quarter earnings per share estimate to 45 cents from 60 cents and

Bear Stearns

downgraded the stock to neutral from attract. For more on Lexmark, check out our coverage of the

company's announcement. Lexmark was lately losing $12.88, or 24.8%, to $39.13.

While these warnings are no friend of the market, they probably won't take it apart the way

Intel's

(INTC) - Get Report

warning did last week.

But these days it only takes a whisper of bad news to snap the market, anyway.

Yesterday's session started out strong, with both tech stocks and industrials charging higher in early action, but rumors that

Lucent

(LU)

CEO Richard McGinn would resign, as well as a buzz that

Cisco

(CSCO) - Get Report

had lost a major customer, walloped the companies' shares and put pressure on several other tech bellwethers. After adding 60 points of padding in early trading, the

Nasdaq Composite Index did a back flip into the red, ending the day lower.

Earnings pre-announcement season, when companies warn of expected shortfalls, is typically a scary time. This time around, there are several factors making it even more so: a slowing economy, a weak euro and sky-high oil prices. The new

Securities and Exchange Commission

disclosure rules to prohibit companies from guiding analysts on their earnings estimates are also making the ride a bit rougher. Though the regulations have not yet gone into effect, some pros say companies have already stopped helping analysts, leading to the recent volume of downside surprises.

"It's earnings warning time," Benning said. "People are a little bit concerned about profits weakening; there are wage pressures. Kodak probably won't do as much damage as Intel did last week," he said.

In the meantime, fat volume and high volatility in recent days should intensify as "window dressing" season comes to a close this Friday -- the last day of the third quarter. No, it's not the time when department stores put up their holiday displays. Every quarter, portfolio managers scramble to tidy up their portfolios -- ditching the stocks that have performed poorly and rounding up the quarter's winners so that clients will like what they see on the books when the quarterly reports come out.

Palm

(PALM)

reported earnings after the close yesterday, doubling consensus estimates of 2 cents by reporting earnings of 4 cents per share, excluding special charges.

TheStreet.com

took a close look at the earnings in a

separate story. Palm was lately trading up 3.1% to $53.75.

While telecoms initially got a boost yesterday, the sector slipped in afternoon trading. One telecom stock that investors were shying away from was

AT&T

(T) - Get Report

, which closed at a 52-week low yesterday as the company failed to make good on promises of a long-term turnaround. AT&T was fractionally lower in early action.

Back to top

Bonds/Economy

The 10-year Treasury note was lately unchanged at 99 10/32, yielding 5.842%.

Back to top

International

Technology stocks were leading European markets lower this morning, following yesterday's late-afternoon selloff on the Nasdaq.

TheStreet Recommends

The

FTSE 100

was lately down 56.90 to 6200.20. Across the channel, the

CAC 40

in Paris was off 38.43 to 6297.85, and the

Xetra Dax

in Frankfurt was down 16.75 to 6771.94.

The euro got a boost on Friday from the

joint intervention of the European Central Bank, the U.S. and Japan. It was lately trading at 0.8747.

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 107.37 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

Bonds/Economy

The 10-year Treasury note was lately flat at 99 10/32, yielding 5.842%.

Back to top

International

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

The

FTSE 100

was lately down 44.30 to 6212.80. Across the channel, the

CAC 40

in Paris was off 16.63 to 6319.65, and the

Xetra Dax

in Frankfurt was down 6.60 to 6782.09.

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 0.8747.

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 107.37 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