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Today's Market: Tech Stocks Capturing the Gold in Midday Action

Consumer goods stocks, though, can't even land themselves a bronze.

Tech stocks are getting all the attention today, giving blue-chip industrials the short end of the stick, after some inflation-free economic numbers. With third-quarter warning season underway, the Dow and Nasdaq have suffered setbacks, as investors begin to consider how an economic slowdown and higher energy prices will affect corporate profits.

"We're certainly seeing some strength in tech, which is always encouraging in market," said Jim Maguire Jr., managing director at

LaBranche

. "We're in a pre-announcement season and that always gives the market jitters. If a leading tech were ever to come out with severe warning, that might derail this rally. The other positive is that

tech seems to be advancing on increased volume. The declines of earlier this week and last week were on lighter volume so from a technical standpoint, that's good."

Lately, the

Nasdaq was up 69 to 3963, buoyed by strength in the semiconductor sector. The group was held back yesterday, after

Banc of America

issued a downgrade on

Intel

(INTC) - Get Report

and

AMD

(AMD) - Get Report

amid a earnings warning from electronic maker

SCI Systems

(SCI) - Get Report

.

The

Dow Jones Industrial Average was recently skidding 68 to 11,114, with currency issues plaguing its multinational components.

Proctor & Gamble

(PG) - Get Report

and

Coca-Cola

(KO) - Get Report

are shaving 23 points off the index.

Stocks were bid higher in the early going, after investors received some encouraging news from August's retail sales and PPI report.

Retail sales rose 0.2% compared to an average forecast for a 0.3% gain. Excluding autos, sales rose 0.3%, in line with expectations. However July's results were revised upward, making the August results appear somewhat weaker than they actually are.

The PPI fell 0.2%, vs. an average forecast that it would rise by that amount. The core PPI, which excludes food and energy prices, rose 0.1%, a tenth less-than-expected. The August PPI does not capture the recent rise in oil prices, which is expected to show up in the September report. Energy prices fell 0.2% in the August PPI, while food prices fell 0.7%, their largest drop in at least a year.

But with the

Fed out of the way, investors have a new concern to fixate on.

"The focus is no longer on the Fed, the focus going into the end of the year will be on earnings, said Maguire. " I think there are investors out there who might be looking for a rerun

of last year, but the determining factor is going to be the third quarter. If they get some positive news there, we could see a rally carries us to the end of the year."

Multinational consumer stocks were getting hit hard today, with the effects of dollar's strength against the weak foreign currencies beginning to show up in third-quarter profits.

"The stronger dollar

makes it harder for the multinationals to do business," said Art Hogan, chief market analyst at

Jefferies

, noting

Colgate

(CL) - Get Report

and

Procter & Gamble

(PG) - Get Report

as examples. "We heard from

McDonald's

(MCD) - Get Report

this morning, and they're telling the Street to go down on their

2000 numbers by 7 cents. Multinationals do better when the dollar is weaker."

McDonald's was off 1.5%, after hitting a new intra-day trading low of $26.75. This morning,

Banc of America

cut its rating on the hamburger giant to market perform from a buy.

Colgate was sinking more than 15% on a downgrade from

Deutsche Banc Alex Brown

. Analyst Andrew Shore sliced his rating after management said that the weaker euro and higher petroleum cost would dent the third-quarter by 5 cents a share.

In other company news,

Conexant

(CNXT) - Get Report

, a modem chip maker, bounced 37.7%, after it set a spinoff its Internet infrastructure unit. The company is slated to hold an IPO in January 2001 for the business.

The

Philadelphia Stock Exchange Semiconductor Index

was recently up 2.1%.

Elsewhere in tech,

TheStreet.com Internet Index

TheStreet Recommends

was adding on 3.3%, with

Yahoo!

(YHOO)

and

Amazon.com

(AMZN) - Get Report

participating in the rally.

Market Internals

Breadth was mixed on moderate volume.

New York Stock Exchange: 1,364 advancers, 1,295 decliners, 596 million shares. 105 new 52-week highs, 36 new lows.

Nasdaq Stock Market: 2,177 advancers, 1,525 decliners, 930 million shares. 91 new highs, 34 new lows.

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Most Active Stocks

NYSE Most Actives

  • AT&T (T) - Get Report: 17.9 million shares.
  • Lucent (LU) : 17.5 million shares.
  • Nortel Networks (NT) : 13.5 million shares.

Nasdaq Most Actives

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Sector Watch

The

American Stock Exchange Oil Service Index

was sliding 1%, with losses from

ExxonMobil

(XOM) - Get Report

and

Chevron

(CHV)

. The group is falling back slightly after the higher price of crude oil sent the index soaring this month.

The

Philadelphia Stock Exchange Oil Services Index

was also off fractionally, with

Halliburton

(HAL) - Get Report

heading 2% lower.

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Bonds/Economy

Bonds initially rallied on today's reports on inflation at the wholesale level and retail sales, but the benchmark issue has since given back the gains, as closer examination of the reports revealed them to be less than completely favorable.

The 0.2% drop in the August

Producer Price Index, its largest drop in a year and a half, was largely attributable to a 0.2% drop in energy prices and an extraordinary 0.7% drop in food prices. With the more recent rise in oil prices, the drop in energy prices almost certainly won't be repeated in the next PPI report.

Retail sales rose just 0.2% (0.3% excluding autos) in August, but the July results were revised up, making August appear weaker than it otherwise would have.

The benchmark 10-year Treasury note, up as much as 10/32 earlier, lately was down 11/32 to 99 23/32 to yield 5.787%.

Meanwhile the 30-year Treasury bond is rather sharply lower, as traders pile onto a development that emerged yesterday -- the 30-year bond once again yielding more than the 10-year note. By pairing short positions in 30-year bonds with long positions in 10-year notes, traders will be able to profit from additional so-called steepening in that portion of the Treasury yield curve.

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International

European markets raced higher during their sessions.

The

FTSE 100

was turning around a week-long losing streak on gains in tech, media and telecom stocks. It closed 77.30 higher to 6555.50.

Across the channel, the

CAC 40

in Paris finished up 69.02 to 6637.91, and the

Xetra Dax

in Frankfurt was 57.42 higher to 7063.68.

The embattled euro was lately trading higher at $0.8636.

Asian markets were mixed overnight.

Traders were busy closing out positions before a long weekend in Tokyo, but the mood was upbeat as the market started to focus on the expected jump in fiscal first-half profits of many large technology firms.

The

Nikkei 225

index rose 22.76 to close at 16,213.28,

The greenback edged higher against the yen to buy 107.13. in Tokyo trading. The dollar was lately trading at 107.10 yen.

Hong Kong's

Hang Seng

index edged 234.35 points lower, or 1.4%, to close at 16,395.43. Action was largely profit-taking in property shares.

Cheung Kong

was flat at HK$96.75 ($12.41), while

New World Development

slid 0.15, or 1.2%, to 12.05.

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