What seemed like a rather benign day turned a bit more sinister in the last hour of the trading session, as money managers stepped up selling pressure on the bellwether technology stocks and semiconductors. The major indices, close to unchanged most of the day, dropped deeper into negative territory at the day's end.

The

Dow Jones Industrial Average, weakened by the tech components and the retailers, dipped 39 to 10,808. The

S&P 500 lost 10 to 1439 and the

Nasdaq Composite Index fell 62 to 3741, finishing near the day's lows of 3737. The small-cap

Russell 2000 fell 3 to 516, and

TheStreet.com Internet Sector

index lost 16 to 764.

After

Intel's

(INTC) - Get Report

warning Thursday evening, sparking a massive selloff followed by an amazing recovery in the Nasdaq, today seemed downright docile.

Investors appeared content with current prices for most of the day, but pressure was evident on the big-cap tech stocks like

Cisco

(INTC) - Get Report

,

Microsoft

(MSFT) - Get Report

and

Oracle

(ORCL) - Get Report

.

Selling accelerated near the close. The relative health of the market can't be considered strong when investors start to aggressively tag market leaders like big-cap technology stocks and semiconductor makers.

It's hard to pick what, exactly, investors are keying on. Clearly, there's concern that Intel's European

woes aren't confined to Intel, and that other big-cap tech stocks will report earnings that show diminished results due to lack of demand in Europe. Intel lost another $2.56 to $45.38 today, on 130 million shares traded, after the stock dropped 21% sharply on over 300 million shares Friday.

Analysts also link the problems more directly to expectations -- namely, that they were simply too high at a time when the

Fed was raising rates and was sure to slow the economy. The extreme valuations that these stocks had been pushed to earlier this year (yes, even after spring) are being taken down. Strategists were quick to note that Cisco, at least from a technical perspective, broke through what was viewed as a support level -- since May, the stock has traded between 60 and 70, but it closed down $3.13 to $57.19 today.

"The market doesn't care right now

about good numbers; they're just lopping off valuations," said Gary Kaltbaum, chief technical analyst at

J.W. Genesis

. "You can't hide institutional selling or buying. When you see the Ciscos of the world breaking down on huge volume, with big price swings, that's not Aunt Mary or Uncle Bob selling."

Which is why Oracle's good numbers from last week are being ignored; investors' worry grows in direct proportion to the number of companies that are issuing warnings. Laser printer manufacturer

Lexmark

(LXK)

warned of lower-than-expected earnings after the close; the stock lost 4.8% today.

Oracle finished down $1.98 to $78.75; Microsoft lost $2 to $61.25. The

Philadelphia Stock Exchange Semiconductor Index

dipped 5%, as worries about demand continue. Prices for spot delivery of DRAM memory dropped again today, according to analysts, and that hurt DRAM producers like

Micron Technology

(MU) - Get Report

, which lost 10.9%. Selling in these stocks, in particular, picked up in the last hour.

It wasn't all bad for technology. Investors are still in love with fiber optics stocks, which continue to run to incredible levels.

Ciena

(CIEN) - Get Report

rose $6.81 to $127.56 today, lifting that price-to-earnings ratio to 630 (the S&P average is 26.3).

The Big Board Was Better

Brokerage stocks and reasonable strength in a number of Dow components held up the

New York Stock Exchange today, but nonetheless, losers were ahead of winners in a generally poor session. The market rediscovered a bit of leadership in the guise of brokerage stocks.

Morgan Stanley Dean Witter

(MWD)

gained 2%;

Lehman Brothers

(LEH)

rose 2.64.8%, and

Merrill Lynch

(MER)

gained 4.8%.

The Clinton Administration's decision to release 30 million barrels from the

Strategic Petroleum Reserve

took some shine out of energy prices, and energy stocks followed. Crude oil futures dropped $1.11 to $31.57, taking with it oil service, refining and production stocks.

ExxonMobil

(XOM) - Get Report

lost 0.8%,

TST Recommends

Chevron

(CHV)

dropped 1.7% and oil processing company

Baker Hughes

(BHI)

lost 3.4%.

Market Internals

Breadth was negative on mediocre NYSE volume, and on strong Nasdaq volume.

New York Stock Exchange: 1,267 advancers, 1,581 decliners, 982 million shares. 72 new 52-week highs, 93 new lows.

Nasdaq Stock Market: 1,789 advancers, 2,252 decliners, 1.74 billion shares. 132 new highs, 173 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent Technologies (LU) : 29.4 million shares.
  • Micron Technology: 18.2 million shares.
  • AT&T (T) - Get Report: 16.1 million shares.

Nasdaq Most Actives

  • Intel: 130 million shares.
  • Cisco: 57.5 million shares.
  • Ericsson (ERICY) : 41.2 million shares.

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Sector Watch

The decline in oil prices didn't light a fire under transportation stocks. Airlines are reportedly increasing prices to offset the increase in fuel costs; the

American Stock Exchange Airline Index

lost 0.3% today, helping prod the

Dow Jones Transportation Average

to a 1.6% loss.

Retailers were weak today, after

K-Mart

(KM)

reached an agreement with 1,600 unionized warehouse workers, which includes signing bonuses and other benefits. K-Mart lost 6.5% today, and the

S&P Retail Index

dropped 2%.

Home Depot

(HD) - Get Report

was down 2.6% today.

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Bonds/Economy

Treasuries were unchanged today, despite a stronger-than-expected

existing home sales

(

definition |

chart |

source

) report.

The benchmark 10-year note lately was up 1/32 to 99 10/32, lifting its yield to 5.842%.

Benefiting from a decline in mortgage interest rates to the lowest levels of the year, existing home sales rebounded 9.3% to a 5.27 million pace in August, after falling 9.2% in July. Economists polled by

Reuters

had expected a much smaller gain.

Meanwhile, oil fell to a one-month low after the Clinton administration's

decision to tap the country's emergency stockpiles. That is helping the 30-year Treasury bond, which has been guided primarily by oil prices lately, falling in price when oil rises and rising when oil falls. Rising oil prices are negative for long-term bonds because of their potential to lead to higher inflation.

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International

Telecom, media and technology stocks rebounded in both Europe and Asia.

The

FTSE 100

closed up 51.20 to 6257.10. Across the channel, the

CAC 40

in Paris finished ahead 77.70 to 6336.28, and the

Xetra Dax

in Frankfurt rose 48.44 to 6788.69. TheStreet.com covered today's markets in

Europe in a separate story.

Asian markets ended higher.

The

Nikkei 225

index rose 174.65, or 1.1%, to close at 15,992.90. A bout of short-covering in the futures market helped Hong Kong's

Hang Seng

surge 816.07, or 5.6%, to close at 15,428.95. Computer maker

Legend Holdings

fared exceptionally well, climbing HK$1.05, or 17.5%, to 7.05 ($0.90) after falling 26.83% last week alone

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