Well-rested, traders are back in the office finding their bearings. And equities are losing theirs.

Downgrades of


(INTC) - Get Intel Corporation (INTC) Report



(MRK) - Get Merck & Co., Inc. (MRK) Report

have the

Dow and

Nasdaq under pressure in the early afternoon.

U.S. Bancorp Piper Jaffray

analyst Ashok Kumar this morning

downgraded Intel to a buy from strong buy, citing weakness in demand from the PC business. The stock was down $4.81 to $69.06, helping to drag the Nasdaq to a 73.3 point loss.


took a close look at

Kumar's comments in a separate story.

The PC makers are also reeling today, perhaps in sympathy. The

Philadelphia Stock Exchange Computer Box Maker Index

was considerably weaker, losing 1.9%.

The Dow was up 28.49 to 11,268.38, and the

S&P 500 dropped 14.28 to 1506.49. The weakness in the Dow was concentrated in the drug stocks and technology components. Merck lately lost $2.25 to $66.94 after a morning downgrade by

Banc of America Securities


Volume, however, is light. Just 451 million shares have traded thus far on the

Big Board. On the Nasdaq, volume is a little better -- 915 million shares have changed hands.

"I think people are largely coming back mentally from being out two weeks," said Bill Schneider, head of U.S. equity trading at

UBS Warburg

. "People are catching up on prices, what news is around and what's happened to valuation. It's a period of adjustment, and I think volume the rest of week will be muted."

The Nasdaq's dip is the most pronounced, largely owing to the Intel downgrade. Other big-cap technology stocks are having a hard time today, as


(CSCO) - Get Cisco Systems, Inc. Report


Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

are dropping.

Fiber optic firm


(CIEN) - Get Ciena Corporation Report

is one of the more significant decliners today, dropping $12.56 after it announced a post-split charge of 6 cents due to a reorganization at one of its European clients.


took a look at

Ciena in a separate story.

"The Nasdaq is down 1.5%, but it had a pretty good run," Schneider said. The tech heavy index rose 11.7% in August.

The small-cap

Russell 2000 was also down, dropping 1.72 to 540.22.

TheStreet.com Internet Sector

index, or the

DOT, was up 0.53%, on the back of a strong move by


(EBAY) - Get eBay Inc. Report

, which rose $2.69 to $65.50.

The NYSE's most active stock today was

Clear Channel Communications

(CCU) - Get Compania Cervecerias Unidas S.A. Sponsored ADR Report

, which continues to sink from its slide last week. The stock, which was halted earlier due to an order imbalance, was lately down $5.69 to $62.88, on very little news. One trader called the action a reaction to the stock's mid-August run-up, which was motivated partially by anticipation the company's market weight in the S&P 500 would increase as a result of the acquisition of



Drug stocks are weakening after Banc of America Securities recommended paring back positions in the major names in those sectors. In addition to Merck,

Eli Lilly

(LLY) - Get Eli Lilly and Company (LLY) Report



(PFE) - Get Pfizer Inc. Report

are posting significant losses.

Utilities stocks were stronger today after the announcement that Britain's

National Grid

TheStreet Recommends

(NGG) - Get National Grid plc Sponsored ADR Report

would purchase

Niagara Mohawk


in a $3 billion transaction.


wrote about the deal in a

separate story. The

Dow Jones Utility Index

was up 1.6%, as most components were getting a boost in today's trading.

After the market's steady, sure run that pushed the broad market to its best levels since the spring, analysts expect a bit of weakness this

month, as the market approaches the season when companies come forward to confess their sins

In addition, it's only natural to expect a mild correction now and then, said Paul Rabbitt, president of


in Los Angeles. "There's sort of a best-of-all-worlds scenario built back into the market," said Rabbitt. "It's true, in the sense that the economy is slowing, but that has been discounted into the price, and the market is looking for a continuation of that perfect scenario. You can see it in sentiment; it's just too bullish."

Market Internals

Breadth was weak on tired, post-holiday volume on the Big Board, with better volume on the Nasdaq.

New York Stock Exchange: 1,254 advancers, 1,469 decliners, 451 million shares. 93 new 52-week highs, 14 new lows.

Nasdaq Stock Market: 1,710 advancers, 2,117 decliners, 915 million shares. 89 new highs, 42 new lows.

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Most Active Stocks

NYSE Most Actives

Nasdaq Most Actives

  • Intel: 35.7 million shares.
  • WorldCom (WCOM) : 33 million shares.
  • Intermedia Communications (ICIX) : 22.2 million shares.

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Sector Watch

Retailers were one of the sectors moving up strongly today. The

S&P Retail Index

gained 1.8%, helped along by strong moves in

Home Depot

(HD) - Get Home Depot, Inc. (HD) Report



(WMT) - Get Walmart Inc. Report

. Other strong retailers include

Circuit City

(CC) - Get Chemours Co. Report



(S) - Get SENTINELONE, INC. Report


On the downside, the

Nasdaq Biotechnology Index

was in poor shape, losing 3.2%.

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On little news and light volume, treasuries are surrendering a portion of the gains that

last week dropped most yields to their lowest levels of the year.

With no major economic releases slated for the week, bond traders are focusing on the new-issue calendar, which typically heats up in September after slowing to a crawl in the final week of August. European telecom companies are expected to issue at least $40 billion of bonds by the end of the year to finance new wireless investments. It is not yet clear how much will be offered during September. Large quantities of new corporate bonds can put pressure on Treasury bond prices because investors may sell Treasuries in order to buy the new corporate bonds.

The benchmark 10-year Treasury note lately was down 2/32 at 100 13/32, lifting its yield to 5.695%.

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The recent run-up in technology and telecom stocks came to an abrupt halt in

European markets today. Gains won in earlier trading were shed as investors engaged in some profit-taking.


FTSE 100

ended down 45.60 to 6752.50.

Across the channel, the

CAC 40

in Paris lost 65.57 to 6856.76, and the

Xetra Dax

in Frankfurt was 56.93 lower to 7388.63.

The euro was lately trading lower at $0.8879.

Asian markets tumbled overnight. The

Nikkei 225

index shed 235.94, or 1.4%, to close at 16,452.27.

The dollar was recently trading at 105.79 yen.

After rising nearly 600 points over the last two sessions, Hong Kong's

Hang Seng

took a break and fell 130.95 to close at 17,595.22.

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