(

Updated from 4:06 p.m. EDT

)

Today's hotter-than-expected

gross domestic product

report slammed the brakes on Wall Street today, as investors grew concerned that the economy might not be slowing down enough to stop the

Fed from raising rates. When it came to stocks, buyers were throwing in the towel, cashing out of sectors that they sped to yesterday, in the face of tech's decline.

The

Nasdaq Composite Index got slammed 179.24, or 4.6% to 3662.99. The

Dow Jones Industrial Average gave into the selloff after resisting the downturn this morning, ending down 74.96, or 0.7% to 10,511.17. The

S&P 500 sank 29.71, or 2%, to 1419.91.

TheStreet.com Internet Sector

index continued to get hit, sinking 35.62, or 4.8%, to 699.27, while the small-cap

Russell 2000 tumbled 11.39 to 490.22.

Typically, market players get defensive when their tech shares tumble, taking positions in other sectors for protection. But today, there was no blatant rotation to be found. Besides a fractional gain for the drugs and a pop in some other D-names like

Coca-Cola

(KO) - Get Report

, most sectors across the board remained in the red, with little activity.

"It is very quiet here, everyone is talking about how it's a typical Friday" said Brian Conroy, head of listed trading at

J.P. Morgan

. "The market was trying to bounce back from its earlier lows, but I think the selling indicates that people have just had it."

Buy the Dips!

Indeed, today's drop is all the more ugly on top of yesterday's 145.47-point loss in the Comp. But Howard Barlow, vice president of

WHB/Wolverine Asset Management

in Stamford, Conn. said he is not that surprised, given the market's

seasonal pattern of reaching an intermediate-term top in July over the last three years.

On the bright side, Barlow said his firm is using the downside to add or start positions in stocks that are oversold.

Nokia

(NOK) - Get Report

, for instance, which was slammed more than 25.8% yesterday, was not a typical stock for his firm to own ... until yesterday.

"We got heavily involved yesterday at a lot lower price. When you get an opportunity to own a global leader in a high-growth business," you take advantage, said Barlow. Nokia is looking a lot better today, closing up 7.1%. "It underscores the fact that you must be discriminating in this market."

Earlier today, the market flip-flopped after a morning report showed preliminary second-quarter GDP rose to 5.2% from a downwardly revised 4.8% in the first quarter. Economists on average had called for a 3.8%. But a relatively benign GDP price deflator, a broad indication of inflation in the economy, softened the headline number's blow. Futures fell on the news, then stocks steamed a little higher at the open, as investors tried to get a handle on the data, but eventually the downside won out.

"The psychological damage done yesterday

in tech was pretty significant. I don't think that was a one-day event. There will probably be negativity in tech through next week," said Rob Cohen, co-head of listed trading

Credit Suisse First Boston

.

Push and Pull

But, these days it seems the market can't decide what it is or what it wants to be, as it casts about for some sort of leadership or direction.

It's the push and pull between bottom-fishers and rally-sellers, those who take advantage of the upside to get out quick. The optimists still think the U.S. economy will get a "soft landing," that there are no more interest-rate hikes on the

Fed's agenda, and that a summer rally might yet pan out yet, while the pessimists see earnings warning after earnings warning and believe the golden days are over.

Lately, the pessimists have been winning, with two lower closes following every up session. In fact, most of what looked like a summer rally in the first half of July was deflated as of Thursday.

For the week, the Dow fell 2.1%, the Nasdaq Composite lost 10.5%, the S&P 500 slipped 4.1% and the Russell 2000 shed 6.2%. The Dow Jones transports fell 1.4%, the

Dow Jones Utility Average

let go of 0.4% and the

American Stock Exchange Composite Index

rose 1.8%. TheStreet.com Internet Sector Index declined 2.7% in the latest week.

There was some good news out there today, or at least some news of interest.

Nortel

(NT)

has decided to buy

Alteon WebSystems

(ATON)

, after its deal with

Corning

(GLW) - Get Report

fell through yesterday. Traders sent both Nortel and Alteon lower on the news, however.

TheStreet.com/NYTimes.com

joint newsroom looked at the deal in a

story earlier.

In today's IPO action, long-distance transmissions equipment producer

Corvis

(CORV) - Get Report

soared 48, or 135.3%, to 84 in its trading debut. The shares were priced at 36 by underwriter

Credit Suisse First Boston

and opened dramatically higher at 95 before falling back a bit.

TSC's

Scott Moritz wrote about the IPO in a

story yesterday and our Silicon Valley columnist, Adam Lashinsky, also

weighed in on the stock earlier this week.

On the bad-news front, financial services companies continue to slash jobs.

Bank of America

(BAC) - Get Report

plans to let go some 7% of its work force as part of a restructuring program to be announced today.

TheStreet.com/NYTimes.com's

joint newsroom covered the layoffs in a

story earlier today.

Insurance company

Conseco

(CNC) - Get Report

is also letting go some 2,000 workers at its finance unit, or 11% of its total work force, to reduce costs. Conseco was off 13.3% today.

First Data

(FDC) - Get Report

, meanwhile, is cutting 6.7% of its work force. Those shares were also lower, down 9.9%.

Another of yesterday's major losers continued to get whacked today despite positive comments from analysts.

VerticalNet

(VERT)

was way down yesterday despite easily beating earnings estimates and reporting "blowout" second-quarter results. This morning, several research firms reiterated buy and strong buy ratings on the company.

WR Hambrecht

said it "continues to see a number of near- and medium-term drivers of expansion and growth which should serve as key catalysts for VerticalNet's stock price," and raised its estimates for the company. The shares were down 11.3% today.

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Market Internals

Breadth was negative on moderate volume.

New York Stock Exchange: 929 advancers, 1,854 decliners, 979 million shares. 69 new 52-week highs, 93 new lows.

Nasdaq Stock Market: 1,134 advancers, 2,849 decliners, 1.741 billion shares. 31 new highs, 214 new lows.

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Most Active Stocks

NYSE Most Actives

  • Nokia: 44.9 million shares.
  • AT&T (T) - Get Report: 24.1 million shares.
  • Nortel: 21.4 million shares.

Nasdaq Most Actives

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Sector Watch

Semiconductor stocks were higher, boosting the

Philadelphia Stock Exchange Semiconductor Index

was up 0.8%.

Net stocks sported a bright shade of crimson as

Yahoo!

(YHOO)

fell about 5.4%.

America Online

(AOL)

lost 3%, and

CMGI

(CMGI)

stumbled 5.9%.

Telecom stocks were under pressure aside from the turnaround in Nokia. The

Nasdaq Telecommunications Index

tumbled 6.3%.

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Bonds/Economy

Treasury prices are falling as bond traders price in higher odds of additional rate hikes by the Fed based on the advance second-quarter GDP report.

The surprisingly fast growth rate lately had traders of

fed funds futures handicapping a 25-basis-point rate hike at the Aug. 22

Federal Open Market Committee meeting at 38%, up from 30% on Thursday.

The benchmark 10-year Treasury note lately was down 12/32 at 103 10/32, making its yield to 6.038%.

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International

European markets lost ground.

London stocks initially rebounded from a decline Thursday on strength in oils and drugs stocks this morning, but they fell back by the close, with the

FTSE 100

ending down 16.4 to 6335.70.

Across the channel, Frankfurt's

Xetra Dax

was down 61.07 to 7122.37 and the Paris

CAC

lost 95.81 or 1.5%, to 6415.72.

The euro was lately trading at $0.9252.

Asian markets tumbled overnight.

Tokyo stocks were spanked to their lowest close in 16 months overnight as bankruptcy concerns continued to stir jitters over economic recovery and the Nasdaq's weakness hit high-tech. The

Nikkei

closed down 343.44, or 2.1%, to 15,838.57.

Despite a sluggish stock market, a wave of option-related dollar-selling pulled the greenback slightly lower against the yen to around 108.83 in Tokyo trading. The dollar was recently trading at 109.67 yen.

Investors continued overnight profit-taking begun Thursday, deflating a recent rally and heady gains over the past few weeks. The key

Hang Seng

index shed 266.16, or 1.5%, to 17,183.93.

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