Semiconductor giant

Intel

(INTC) - Get Report

sent the market into a tailspin after it issued an earnings warning last night. Markets opened and quickly tanked this morning, but were lately having a semi-recovery.

After Intel, a

Dow Jones Industrial Average, announced after the close yesterday that its third-quarter revenue would fall below estimates, the tech-heavy

Nasdaq Composite Index plummeted more than 200 points this morning. Lately, those losses had been roughly cut in half, with the Comp down less than 120. The Dow was off about 100, with Intel accounting for more than 70 points of the drop.

Intel was down a whopping 21% to $48.56, with a record 220 million shares changing hands. The company said it expects third-quarter revenue to rise 3% to 5% from the second quarter's $8.3 billion. The Santa Clara, Calif., chip-maker said third-quarter gross margin would also fall below estimates, at 62% compared to the previous 63% to 64% that had been expected. It has lost more than $86 billion in market capitalization -- or $20 billion more than Bill Gates' net worth. Intel accounts for 17 percent of Nasdaq volume.

Can you play catchup? A slew of brokerage firms cut Intel's ratings and earnings per share estimates this morning, including

Merrill Lynch

,

Lehman Brothers

,

Deutsche Banc Alex. Brown

,

Credit Suisse First Boston

and

Salomon Smith Barney

.

Boxmakers depend on the semiconductors for their very life. So it's no surprise that Intel's news was hampering those stocks as well. The

Philadelphia Stock Exchange Computer Boxmaker Index

was off 4.8%.

Apple

(AAPL) - Get Report

,

Dell

(DELL) - Get Report

and

Unisys

(UIS) - Get Report

were all lower on the day.

The selling today spread to a number of other tech bellwethers, including software heavy-hitter

Microsoft

(MSFT) - Get Report

, computer-networking giant

Cisco

(CSCO) - Get Report

and fellow-semiconductor

Micron Technology

(MU) - Get Report

. All were all taking a beating.

And Intel wasn't the only member of the Semiconductor Index feeling the pain today,

Applied Materials

(AMAT) - Get Report

was down 8.6%,

KLA-Tencor

(KLAC) - Get Report

was off 15.1%,

Linear Technology

(LLTC)

was down 6.3% and

Novellus

(NVLS)

was off 13.8%.

Still, some think the news is really Intel-specific, that it won't spread to the rest of tech, and that, in fact, the market is oversold enough for a nice rally.

"This is the big shoe everyone has been waiting for to drop. With the fear hanging over the market for the last two to three weeks, this creates a climactic situation," said Tony Dwyer, chief market strategist at

Kirlin Holdings

. "We'll have back and forth action for a few days, but now we have hit a bottom. What else could hurt tech?"

Brian Finnerty, head of trading at

C.E. Unterberg Towbin

, expressed a similar viewpoint. "The market is acting very well

considering the news. There will be a lot of negative press and we might get another bout of selling after the weekend but its nowhere near" what some people had expected, he said noting a bounce in

Nortel

(NT)

and some fiber optic stocks. Finnerty said the latest Intel news is something like an "exclamation point" to a market that's been jittery all year. "I guess it shows that the world isn't over."

This earnings preannouncement season -- the time ahead of earnings reports when companies warn they might miss estimates -- has seen a euro in the dumps, record highs in oil prices and a slowing economy, all of which have had investors on edge. In the past few weeks, Wall Street has severely punished the share prices of several companies that have issued warnings.

TheStreet.com

published a chart of these

earnings warnings in a separate story.

But the central banks in Europe, the U.S. and Japan have joined together to buy euros in an attempt to break the euro's fall. This if the first time since 1995 that the U.S., Japan and Europe have joined together to intervene on behalf of a currency. The euro soared up to 4% against the dollar, recently trading at $0.8880.

TheStreet.com

wrote a piece looking at the

intervetion .

And crude-oil futures continued to trade lower today. November crude-oil futures were lately trading down 37 cents to $33.63 a barrel, after falling $1.24 to $34 yesterday.

Noting the intervention in the euro and saying he thinks energy prices have peaked, Dwyer noted. "All this negative sentiment sets the stage for a rally."

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Market Internals

Breadth stinks. Volume was particularly heavy on the Nasdaq and moderate on the Big Board.

New York Stock Exchange: 939 advancers, 1,734 decliners, 649.8 million shares. 39 new 52-week highs, 93 new lows.

Nasdaq Stock Market: 1,041 advancers, 2,748 decliners, 1.2 billion shares. 37 new highs, 206 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent (LU) : 16.7 million shares.
  • Advanced Micro Devices (AMD) - Get Report: 14.6 million shares.
  • Micron: 13 million shares.

Nasdaq Most Actives

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Sector Watch

Though numerous tech sectors were coming under pressure in the wake of Intel's news, one or two were benefitting from the rush out of high tech. Drug stocks in particular were getting some good medicine as gains in

Bristol Myers Squibb

(BMY) - Get Report

and

American Home Products

(AHP)

sent the

American Stock Exchange Pharmaceutical Index

up 2.8%.

The

Philadelphia Stock Exchange Semiconductor Index

was still on a slide, lately down 9%.

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Bonds/Economy

This morning's coordinated intervention to halt the euro's slide has given a lift to European government bond prices, and Treasuries rose in tandem. They have since retreated

The 10-year Treasury note was lately down 2/32 to 99 13/32 its yield at 5.83%.

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International

Intel's surprise whacked

Asian markets overnight and was dragging heavily on

Europe.

TheStreet.com

wrote a separate story about how Wall Street got

soaked by Intel's announcement.

Intel's news had all European markets deep in the red in early action, though stocks got a lift from news that the

European Central Bank

, the U.S. and Japan had joined in an effort to stop the euro's slide.

The

FTSE 100

ended slightly in the green up 6.7 to 6205.9.

Across the channel, the

CAC 40

in Paris edged up 3.81 to 6258.58, and the

Xetra Dax

in Frankfurt was up 15.86 to 6698.78.

The euro was getting a boost from intervention, lately trading at 0.8785.

The Intel news hit Asian markets, particularly tech stocks, severely, fanning fears that growth in the chip market, and perhaps in telecom as well, would slow down in Asia.

Closing figures were ugly in Tokyo, but there were glimmers of hope that the market will rebound next week. The

Nikkei 225

index shed 492.80, or 3%, to close at 15,818.25.

Thanks to the stock slump in Tokyo, the greenback edged higher recently to fetch 106.88 yen in Tokyo trading. The dollar was lately trading at 107.82 yen.

Korean stocks were all shook up by Intel's news, with the key

Kospi

index declining 42.74, or 7.2%, to close at 553.25. Besides ongoing woes at

Daewoo Motor

, many foreign investors today fled the tech sector as well.

Samsung Electronics

fell KW30,000 ($168.74), or 13.6%, to 190,000, while rival

Hyundai Electronics Industries

lost 1550, or 9.8%, to 14,350.

Hong Kong's

Hang Seng

index also slumped 551.57, or 3.1%, to close at 14,612.88 as telecom shares fell hard.

China Mobile

(CHL) - Get Report

shed HK$4.10, or 8.0%, to 46.90, while

China Unicom

(CHU) - Get Report

lost 1.05, or 6.3%, to 15.50.

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