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"Negative" was the adjective of the day -- and it could have been used in front of earnings news, research reports from Wall Street analysts and general market sentiment.

Even though the

Dow Jones Industrial Average and the tech heavy

Nasdaq Composite Index ended off their lows of the day, they were still firmly in the red at the close.

The morning started off in its fairly typical manner of late. That is to say, the markets opened positive and then tumbled into the red. The drop was fueled by downgrades on chipmaker



and better-than-expected earnings that were mixed with a warning about future growth from semiconductor equipment maker



. That shattered semiconductors and all that depend upon chips, including computer boxmakers (the folks who make the machines) and telecom companies.

Matt Johnson, head of Nasdaq trading at

Lehman Brothers

, said that, Teradyne's news "certainly spooked the market place a little bit. Is it an overcapacity concern or a slowdown in demand? The jury's still out."



, however, wasn't hurt by the news. It rallied ahead of its earnings announcement that didn't come out until after the close.

wrote a

separate story about IBM's earnings, which topped analyst estimates on middling revenue.

But tech was only part of the Dow's problem.

J.P. Morgan


inflicted more than 30 negative points on the Dow (meaning that it alone contributed 30 points to the Dow's total loss of 149 points), while

American Express





took away about 20 points. Financials were down on general concern about credit quality in loan portfolios of banks and brokerage firms. The

American Stock Exchange Broker/Dealer Index

, which tracks the financial services sector, was down 2.8%, while the

Philadelphia Stock Exchange/KBW Bank Index

, which tracks the banking industry, was 3.5% lower.

Blue-chip companies




Eastman Kodak

( EK),

General Electric



Home Depot


separately weighed the index down with more than 10 points each.

America Online


fell 17.1% on concerns that a decline in advertising spending will hurt its earnings, which are scheduled to be announced Wednesday. The news sent Internet sectors downward. Internet Sector

fell 6.7%, while E-Commerce Sector

fell 6.8% and E-Finance Sector

fell 4.2%.

So it's no surprise to find some big losers throughout the Nasdaq.

Data storage and networking company



fell 30%, or $24.69, to $57.06, after it announced that it would buy rival



in a $2.7 billion stock swap.

took a look at the deal in a

separate story.



bounced ahead of its earnings announcement, which came out after the market closed. It beat lowered forecasts.

wrote a story looking at the

earnings report.

Positive earnings news from Intel and others is what the market's looking for, Johnson said, adding, "We need some stability in the Middle East and the CPI number that's coming out tomorrow not to be something ridiculous." The Consumer Price Index is the key gauge of inflation.

With investors driving the markets lower during this flurry of corporate earnings reports, there doesn't seem to be confidence that the news so far is as strong as investors are seeking.

Market Internals

Breadth was terrible on active volume.

New York Stock Exchange: 813 advancers, 2,115 decliners, 1.16 billion shares. 37 new 52-week highs, 222 new lows.

Nasdaq Stock Market: 1,231 advancers, 2,777 decliners, 1.9 billion shares. 31 new highs, 365 new lows.

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Most Active Stocks

NYSE Most Actives

  • America Online (AOL) : 49.62 million shares.
  • Xerox (XRX) : 25.49 million shares.
  • Micron: 23.62 million shares.

Nasdaq Most Actives

  • Intel: 76.13 million shares.
  • Cisco (CSCO) : 50.86 million shares.
  • WorldCom( WCOM): 49.25 million shares.

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Sector Watch

Biotech companies bounced for a third-straight day. The

American Stock Exchange Biotechnology Index

rose 1.3%, regaining some of an October slide.

Oil service stocks in the

Philadelphia Stock Exchange Oil Service Index

rebounded, gaining 0.7%, after dropping over the past two sessions.



was a big leader in the turnaround after it announced

third-quarter earnings that beat the street's estimates of what those earnings would be. Schlumberger gained 2.5% to $81.88.


Philadelphia Stock Exchange Semiconductor Index

, known as the SOX, got pummeled. It fell 9.3%. This move down came after Micron was cut by a

trio of analysts,

Applied Materials



price target

was lowered by

Credit Suisse First Boston




said its earnings were in line,

but it did not exceed expectations.

Tech, as a whole, was mired in the red. Telecommunications, big cap tech, computer peripheral makers, wireless and computer makers were all much lower. A wide cross section of industries related to semiconductors fell. The

Morgan Stanley High-Tech 35

fell 3.4%, while the

Philadelphia Stock Exchange Computer Box Maker Index

fell 2.8%.

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Mideast concerns continue to dominate trading in bond markets.

The latest U.S.

industrial production


definition |

chart |


) data showed an increase of 0.2% in September after a revised 0.4% gain in August, generating further evidence that the economy is slowing in line with the "soft-landing" theory. In the third quarter, output rose only at a 2.8% annual rate. In the prior period, the annual rate of growth was a strong 8.2%.

Following the data, the 10-year note was off, but stock market woes sent investors to a safer haven. The 10-year Treasury was lately up 12/32 at 100 16/32, yielding 5.680%.

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Major markets in Europe

closed lower .


FTSE 100

was off 82.50 to 6203.20.


CAC 40

in Paris was 20.89 lower to 6067.15, while the

Xetra Dax

in Frankfurt was off 95.54 to 6531.71.

The euro continued lower, lately trading down to 0.8540.

The major

Asian equity markets closed lower Tuesday, amid continuing concern over events in the Middle East and a renewed bout of weakness for the region's technology shares.


Nikkei 225

closed down 172.1, or 1.1%, at 15,340.2.

In Tokyo trading, the dollar was trading higher at 108.15 yen from 107.85 yen Monday. It was lately trading at 107.99 yen.

Elsewhere, South Korea's stock market got hammered as

Hyundai Electronics

plummeted nearly 15%, after reporting third-quarter earnings. The


index tanked 37.3, or 6.8%, to 512.9. In Hong Kong, the

Hang Seng

index fell 99.9, or 0.7%, to 14,873.4, as

China Mobile


fell HK$0.50, or 1%, to 50.75 ($6.51).

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