(Updated from 9:39 a.m.)

Amid growing fears of slowing telecom and technology spending in the U.S., another beleaguered telecom warrior phoned in sick this morning. It was

WorldCom

(WCOM)

, which warned of slower revenues going forward and announced plans to spin off its long-distance unit, MCI.

That, plus a fourth-quarter revenue warning from semiconductor-equipment maker

Altera

(ALTR) - Get Report

and a downgrade on French computer and phone-networks maker

Alcatel

(ALA)

was giving investors a post-Halloween spook.

Brokerages were also under fire after

Goldman Sachs

reduced its fourth-quarter earnings forecasts by 9% for brokerages

Lehman Brothers

(LEH)

,

Morgan Stanley Dean Witter

(MWD)

and

Merrill Lynch

(MER)

. Goldman cited softness in the IPO market and "less transparent businesses like private equity."

The

Dow Jones Industrial Average was lately off 18 to 10,953. The tech heavy

Nasdaq Composite Index, however, was dragging 51 lower to 3318. And the

S&P 500 moved 7 lower to 1422.

In fact, it looks like yesterday's surging optimism over tech companies and stock price valuations may have been very short-lived. Tuesday took the tech-laden Nasdaq up 5.58%, or 178.23 points, to 3369.63. The Dow rose 1.25%, or 135.37 points, to 10971.14 on the day -- an eager flirtation with the 11,000 mark. The blue-chip index had fallen below the 10,000 mark in mid-October.

So what's ailing WorldCom now? The U.S. telecom and data services company warned that pricing pressure and a strong dollar would cut into its fourth-quarter revenue growth. The company said revenues would grow only 7% to 9% year over year. The company also announced the creation of a separate tracking stock for its consumer-related business, MCI. But the move didn't have anyone convinced, and WorldCom was trading $3.69 to $20.06 in preopen action. WorldCom's spinoff of MCI is a strategic shift in business for the company, which has seen its shares pummeled over the past

three months and its planned acquisition of rival

Sprint

(FON)

left at the altar. WorldCom was tumbling 18.4%.

Just last week, another troubled U.S. telecom,

AT&T

(T) - Get Report

announced plans to split into

four different companies. Investors didn't give that stock any relief, either. Today, AT&T was off another 4.9%.

But the trouble was not limited to telecom this morning. Semiconductor capital-equipment makers were also tumbling on the heels of Altera's warning. The company said it expects fourth-quarter growth to be at the low end of October's estimates provided of 12% to 15%. The company was hit by bearish comments this morning.

Credit Suisse First Boston

, for one, said it thinks Altera and its primary competitor,

Xilinx

(XLNX) - Get Report

, "will likely come under pressure given this news."

Altera also said in a release on its Web site that its resales for October were "slightly below management expectations." Altera was off 16%.

And then there was Alcatel.

Goldman Sachs

slashed its price target on the French computer and phone-networks maker to 85 euros from 110 euros this morning. Market research firm

Fuji Futures

attributed some of Tuesday's stellar rally on the Nasdaq to Alcatel's strong third-quarter earnings and optimistic outlook. Alcatel was 3.5% lower.

Elsewhere in the terrible land of telecom, broadband services provider

Covad

(COVD)

this morning announced that CEO and Chairman Robert Knowling had resigned. The move comes just two weeks after the company reported a wider-than-expected third-quarter loss. It was lately off 3%.

Alas. With September and October now behind us -- both historically horrendous months for stocks -- and earnings season headed into the finish line, some investors were hoping for a continuation of yesterday's rally. All the bad news must be out of the way, some market pros reasoned.

Mind you, there is still the October

National Purchasing Manager's Index

, due out at 10 a.m., to contend with. This report, known as the PMI, will give investors a peek at the pace of spending in the manufacturing sector.

This is an important number to watch, considering the growing concern about slowing business spending on plant and equipment. Yesterday's

Chicago Purchasing Manager's Index, often a good predictor of the PMI, showed slowing spending by manufacturers. The PMI is forecast to come in at 49.8 vs. the previous month's 49.9, according to

Reuters

consensus estimates. The PMI signals expansion when it is above 50 and a contraction when it comes in lower.

TheStreet.com

recently took a look at how slowing capital expenditures is

affecting stocks.

What

Federal Reserve Chairman

Alan Greenspan and Wall Streeters really want to see from economic data right now is strong productivity growth coupled with manageable inflation. And business spending is partly what allows for increased productivity.

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Bonds/Economy

Bond prices were rising moderately this morning. The benchmark 10-year

Treasury note was up 2/32 to 99 31/32, yielding 5.755%.

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International

The major European indices had turned tail into the red by midsession on the negative WorldCom news.

The

FTSE 100

in London was down 23.70 to 6414.70.

The

CAC 40

in Paris was 46.71 lower to 6350.95, while the

Xetra Dax

in Frankfurt was off 40.30 to 7037.14.

After economic data on Friday showed a slowing U.S. economy, the

battered euro continued to rise. It was lately at 0.8537.

Most Asian

equity markets closed with solid gains Wednesday, as technology shares from Seoul to Hong Kong rallied following the Nasdaq's strong performance Tuesday.

In Tokyo, the

Nikkei 225

closed up 332.8 points, or 2.3%, at 14,872.4.

In Tokyo trading, the dollar traded at 109.16 yen, up from Tuesday's close of 108.99 yen. The greenback was lately at 108.44.

Elsewhere, South Korea's

Kospi

index surged 34.3, or 6.7%, to 548.8, as

SK Telecom

(SKM) - Get Report

jumped 13,500 won, or 5.6% to 256,000 ($224.75) and

Samsung Electronics

rocketed 20,500 won higher, or 14.4%, to 163,000.

Hong Kong's

Hang Seng

index rose 453.7, or 3.1%, to 15,349.0, as heavyweights

China Mobile

(CHL) - Get Report

rose HK$0.25, or 0.5%, to 50.50 ($6.46) and

HSBC

(HBC)

surged HK$4.50, or 4.2%, to 113.00.

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Senior markets editor Ellen Braitman chats with Christopher Edmonds, columnist for RealMoney.com exclusively on TheStreet.com at 3 p.m. EST on Wednesday, Nov. 1. Join them with your market and investment questions by logging on the home page.