Today's Market: Tech Stocks Under Pressure

<LI>Latest inflation report shows slowing inflation.</LI> <LI>Applied Materials rising on solid earnings report.</LI>
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(Updated from 9:42 a.m. EST)

Some hangover from yesterday's late -- but swift -- pullback in the market, continuing confusion about the presidential election and renewed jitters about corporate earnings had tech stocks sagging this morning.

It was the

Fed's warning words on inflation in the afternoon that flattened an earlier rally Wednesday and that continued to pressure stocks this morning. The Fed said it would leave interest rates alone. But in a statement accompanying that decision, the policy-making body said the risk of excessive inflation remains stronger than the risk of recession.

The

Dow was lately lower by 3 points to 10,704; the tech-laden

Nasdaq was down 30 to 3136. The broader

S&P 500 index was down about 3 to 1387.

"Greenspan mentioned the I-word

inflation, which is never good. It freaks a lot of people out," said Phil Ruffat, vice president of

Fuji Futures

.

Some market-watchers saw hints that the Fed may be moving away from those concerns, however.

TheStreet.com's

senior writer Elizabeth Roy Stanton took a close

look behind the Fed's statements.

But investors are also desperate for some resolution on the elections. "If we can get this thing resolved, we can move along. If this ends up in the courts for the next few weeks, it's going to be kind of tough. I'm having nightmares -- it's wearing a lot of portfolio managers thin," Ruffat said. "For the most part, we'll probably tread water a little bit today."

What did the market want to hear the Fed say? That risks of inflation were balanced with an economic slowdown. This would have been a first step to move the Fed in the direction of beginning to cut interest rates at some point. Business, and stocks, love lower interest rates.

Meanwhile, a series of six rate increases have begun to slow the pace of economic growth just in the past few months. This morning, the market got another sign of slowdown in the October

Consumer Price Index, which came in at 8:30 a.m. The key inflation indicator came in right in line with expectations, with both the headline and core number -- minus food and energy -- hitting a 0.2% rise.

In September, the headline CPI jumped 0.5% and the core CPI rose 0.3%.

Because food and energy prices are so volatile, this core number is usually the one to watch. Much of the recent pressure on inflation has been blamed on an upward spiraling in oil prices as supplies dwindle and the winter threatens to be a cold one.

On the earnings front, investors seem unsure about how they should read last night's report from semiconductor-maker

Applied Materials

(AMAT) - Get Report

. While the company reported earnings above official analyst estimates by a penny, it also issued a foggy earnings outlook and didn't provide much clarification concerning inventory buildup. AMAT was lately up 3%.

At least one securities firm felt the report was bad news.

Merrill Lynch

cut Applied Materials' 12-month price target and earning per share view on the company this morning. But

Lehman Brothers

said in a report this morning that the shares offer "exceptional value." Lehman hasn't done any recent underwriting for this company, according to the report.

This quarter has been one of the worst this year for earnings disappointments, and investors are tired of bad news. They are particularly sensitive to company forecasts for future quarters, as they wonder how much worse the growth and earnings outlook can get.

The semiconductor sector as a whole, including Applied Materials, has taken a beating in the past few months, but had risen ahead of the company's much-anticipated earnings report.

The

Philadelphia Stock Exchange Semiconductor Index

, which tracks the chip sector, had lost some 45% of its value between early September and the end of last week. It's been pressured by fears of slowing demand evidenced by reduced spending among computer-makers and telecom companies -- and by growing inventory at some of the semis.

Oracle

(ORCL) - Get Report

and

Network Appliance

(NTAP) - Get Report

were rising this morning, however. Oracle has been rallying since Tuesday, while Network was slammed yesterday after warning of a sales slowdown.

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Bonds/Economy

Bond prices were

edging higher this morning after data was released showing the CPI rose 0.2% in October. The benchmark 10-year

Treasury note was up 6/32 to 100 15/32, yielding 5.685%.

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International

European markets were all lower near lunchtime.

The

FTSE 100

had lost earlier steam and was lately down 8 to 6424.3.

Over on the continent, stocks were accelerating into the red. The

CAC-40

in Paris was off 66.70 to 6235.08 and the

Xetra Dax

in Frankfurt was 139.33 lower to 6821.76.

The beleaguered euro was lately trading lower at $0.8561.

Asian

equity markets were a jumble overnight, asregional woes drove most of the markets down. In Hong Kong, however, stocks moved higher.

In Tokyo,

Prime Minister Mori

faced increased pressure to step down. Many in opposition, and even some of Mori's own ruling party, are concerned about the slow recovery and reform of the economy. The

Nikkei 225

closed down 212.1 points, or 1.4%, at 14,587.0

In Tokyo currency trading, the dollar climbed to 108.94 Monday. The greenback was lately trading at 107.92 yen.

Elsewhere, Taiwan's

TWSE

index tanked 282.9 points, or 4.9%, to 5454.1, as the central bank admitted the country's bad loans were higher than the government had estimated.

Hong Kong's

Hang Seng

index bucked the downward trend, rising 171.0, or 1.1%, to 15,298.4 amid very low volume.

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