New riddle: What walks on all fours before the open, walks on two legs before 10 a.m., and gets the legs kicked out from under it after 10 a.m.? If you said the stock market, you're correct.

The equity market is sick again, with the major indices succumbing to increasing worries over upcoming earnings reports and, to a lesser extent, the tight labor markets as evidenced in this morning's September

jobs report. The

Nasdaq Composite Index lately was trading at its lowest point since May 30.

Financial stocks, which had acted as leadership for the market, are dropping sharply today, and there's significant weakness in technology stocks, extending recent losses largely attributable to earnings warnings from companies such as

Dell

(DELL) - Get Report

and

Intel

(INTC) - Get Report

.

"It's the same thing at 10 a.m. every morning: sell, sell, sell," said Scott Curtis, trader at

Kaufman Brothers

. "You buy at 9:30 and sell at 10."

Hardest hit today are the brokerages, which are diving on concerns of margin calls and chatter over rumored losses on

junk-bond trading desks. They're rumored to be sitting on large amounts of money-losing debt. The concern among investors would be that trading-related losses would hurt revenues of the big brokerages.

Wall Street has witnessed significant losses today in the shares of

Morgan Stanley Dean Witter

(MWD)

(down 8.4%),

Bear Stearns

(BSC)

(off 8.8%), and

Lehman Brothers

(LEH)

(down 7%). The

American Stock Exchange Broker/Dealer Index

was lately off 5.5%. The banks were dropping in sympathy; the

Philadelphia Stock Exchange/KBW Bank Index

lately lost 4.2%.

"It's sort of pulled one of the legs of the stool out of from under the market," said Todd Clark, head of listed trading at

WR Hambrecht

in San Francisco.

Meanwhile, the recent malaise in the technology sector continues, but those concerns are largely macroeconomic, related to an apparent reduction in demand for semiconductors and telecommunications equipment.

Veeco Instruments

(VECO) - Get Report

, for one, was down $33.66, or 32.8%, to $68.88 after an earnings warning.

Fiber optics stocks were getting hurt.

JDS Uniphase

(JDSU)

was down 3.7%;

Sycamore Networks

(SCMR)

was off 12.3%, and

SDL

(SDLI)

was down 4.1%.

Lowe's

(LOW) - Get Report

, the home improvement retailer, was reeling today after disclosing that

same-store sales for the third quarter would fall short of expectations. The stock was down 5%.

Other big retailers were getting hurt on the news, including Dow component

Home Depot

(HD) - Get Report

, off 5.4%.

Today's jobs report cannot help the situation. A number of traders expressed the view today that the market, by and large, was expecting some relief from the

Federal Open Market Committee, in the form of a modification of the

Fed panel's policy statement to indicate that it was less worried about rising inflation. They got no such relief from the Fed Tuesday, when the Fed maintained that the economic risks still lean toward higher inflation.

The September employment report showed a decline in the unemployment rate to 3.9%, matching the 30-year low hit in April. It's an indication of continued tightness in the labor market, and the Fed has remained concerned that tight labor markets could ultimately lead to wage-cost pressures and rising wage inflation.

"I'm trying to get the needles out of my eyes," said Tony Cecin, manager of Nasdaq trading at

U.S. Bancorp Piper Jaffray

TST Recommends

. "I think people were hoping for a sign that the next move was going to be down, so part of it is psychology."

Market Internals

Breadth was horrific on strong volume.

New York Stock Exchange: 957 advancers, 1,722 decliners, 686 million shares. 37 new 52-week highs, 86 new lows.

Nasdaq Stock Market: 937 advancers, 2,735 decliners, 1.1 billion shares. 19 new highs, 260 new lows.

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Most Active Stocks

NYSE Most Actives

  • AT&T (T) - Get Report: 15.6 million shares.
  • Clear Channel (CCU) - Get Report: 11.2 million shares.
  • America Online (AOL) : 10.8 million shares.

Nasdaq Most Actives

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Sector Watch

Internet stocks are among today's weakest.

priceline.com

(PCLN)

, which has been massacred in the last few days after announcing it would shutter its online grocery business, was down 16.7%.

Yahoo!

(YHOO)

lost 5.9%, and

TheStreet.com Internet Sector

index was lately down 6.4%.

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Bonds/Economy

Bonds have pared their losses thanks to the weakness in stocks. Falling stock prices are seen as a leading indicator of economic activity. They also make bonds more appealing as an alternative investment.

Earlier, bond prices fell as investors concluded that the September

employment report

(

definition |

chart |

source

) makes the

Fed less likely to ease up on interest rates in the near future.

The September jobs report measured a decline in the unemployment rate to 3.9% -- matching the 30-year low it hit in April -- from 4.1% in August. A low unemployment rate is a key indicator of a healthy economy, one that does not require assistance from the Fed in the form of easier monetary policy.

Also indicating that the economy is strong, the employment report counted 252,000 new nonfarm jobs in September. Netting out the loss of 27,000 temporary Census jobs and the return of 75,000 strikers, the underlying increase was 204,000, in line with the recent trend. A shift in monetary policy is unlikely to occur unless there is a pronounced slowdown in the pace of job-creation.

The benchmark 10-year

Treasury note lately was up 7/32 at 99 14/32, lowering its yield to 5.825%.

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International

European stocks were mixed following this morning's U.S. employment report.

In London, the

FTSE 100

was lately up 9.1 to 6391.2.

Across the channel, the

CAC 40

in Paris was down 76.71 to 6258.41, while the

Xetra Dax

in Frankfurt was off 143.74 to 6748.75.

The euro was squeezing out some slim gains, lately up to 0.8677.

TheStreet.com

recently looked at what

ails the euro.

Amid a powerful earthquake in Japan and government-supported buying in Taiwan,

Asia's major stock markets closed out the week Friday on a mixed note.

Japan's financial markets largely ignored a strong tremor in the Western part of the country, as trade remained lethargic ahead of a three-day weekend. The

Nikkei 225

closed down 105.0, or 0.7%, to 15,994.2.

In Tokyo currency trading, the dollar was little changed against at 109.40 yen. It was lately trading at 108.77.

Taiwan's

TWSE

index surged 324.0, or 5.4%, to 6353.7, as the government continued to support the market with buying from its $16 billion stabilization fund. The country's equity market has been wracked by political uncertainty in the country this week.

South Korea's

Kospi

index closed up 2.1 points, or 0.3%, to 608.9, and Hong Kong's

Hang Seng

index was closed for a holiday.

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