Today's Market: What Went Up Yesterday Coming Down Now

(

Updated from 1:53 p.m. EDT

)

The old adage, "What goes up, must come down," rang true for today's trading activity. Yesterday's

robust gains continued to trickle further into the red this afternoon, after investors took money off the table in the wake of two tech giants' shortcomings.

The selling pressure increased in late-day trading as the major-indices losses grew worse. The

Nasdaq Composite Index was lately down 76, or 1.8%, to 4108 as the tech-laden measure came slightly off its morning low. The

Dow Jones Industrial Average was down 118 to 10,726. The

Russell 2000 was down 9.3 to 525.5, while the broader

S&P 500 was down 15.7 to 1480.

Thursday's euphoria over solid earnings reports and a stable interest-rate outlook seemed like a distant memory as nasty earnings warnings from tech firm

Agilent Technologies

(A) - Get Report

and Swedish telecom group

Ericsson

(ERICY)

roiled the market.

Ericsson's component-shortage problems in its handset division weighed heavily on other telecom shares.

Motorola

(MOT)

slipped 2.8% and

Nokia

(NOK) - Get Report

slumped 1.7%.

The

Nasdaq Telecom Index

was slipping 14.3, or 1.5%, to 909.6.

"It is not unusual to see profit-taking in the sectors that have done well," said John Bartlett, director of economic and market strategy at

Commerce Bank

in St. Louis. "There is still a high level of uncertainty, and earnings warnings only make people more nervous," he said.

On the bright side, "we have had a great earnings season," said Dan Ament, associate vice president and investment executive at

Dain Rauscher

in Minneapolis. Ament points out that a strong 55% of the S&P 500 companies have beat expectations, adding that 8% have missed and the remainder have met expectations.

But at least for today, investors were looking elsewhere for clues to the market. Even strength in tech bellwether

Sun Microsystems

(SUNW) - Get Report

following good and revenues and earnings reports couldn't boost the market's mood.

Semiconductor stocks were getting nailed, and the

Philadelphia Stock Exchange Semiconductor Index

was down a painful 4.6%.

Applied Materials

(AMAT) - Get Report

and

Altera

(ALTR) - Get Report

, just to name a few, were getting whacked more than 5%.

And although the losses look big on the charts, some insiders such as Brian Gilmartin, portfolio manager at

Trinity Asset Management

, do not see anything fundamentally wrong with the sector. "We had a lot of good news built into the sector and a very strong June. I think that they'll tread water for another month or so, but I think that the correction is natural."

But the drug sector, which started the day on a down tick, perked up, with the

American Stock Exchange Pharmaceutical Index

buzzing up 1.3%.

Johnson & Johnson

(JNJ) - Get Report

headed upward in the afternoon trading, along with fellow Dow component

Merck

(MRK) - Get Report

, which was fractionally higher.

TheStreet.com Internet Sector

, the

DOT, was sliding 40 to 825.

After

Fed Chairman

Alan Greenspan cleared the air a little Thursday morning with some modestly friendly words on inflation, the market was freed to center its attention on earnings. For two straight days before the testimony, jitters over Greenspan's words had sent investors on a selling spree, and even good earnings news became bad news.

The Fed king's semiannual testimony on the state of the economy before

Congress

indicated that if signs of economic slowdown continue, the Fed likely won't raise interest rates when it next meets, Aug. 22.

The questions today are just how much good news has been factored into the market and which of the reporting companies, with earnings and revenues good or bad, will tip the scales. Yesterday, a positive earnings surprise from

IBM

(IBM) - Get Report

concerning earnings in the second half of the year was an important market catalyst and sent both tech and mortar stocks galloping into the sunset. Bad news from

Lucent

(LU)

about future earnings held gains on the S&P 500 back, but didn't dampen the market's overall spirit. The Nasdaq rose 3.2% on the day, recovering 68% of its two-day plunge. The Dow, meanwhile, finished up 1.4% and the S&P 500 rose 1%.

Hewlett-Packard

(HWP)

spinoff Agilent, meanwhile, warned that its third-quarter earnings would come in at 18 cents to 22 cents a share, well short of the 35-cent forecast by analysts surveyed by

First Call/Thomson Financial

.

Ventro

(VNTR) - Get Report

beat estimates with a loss of 74 cents a share vs. consensus of an 80-cent loss. But analysts weren't impressed after blow-away numbers from fellow B2Bers

Ariba

(ARBA)

,

Commerce One

(CMRC)

and

PurchasePro.com

(PPRO)

.

There was a little good news, however. Besides Sun Microsystems, a couple of other tech companies reported good earnings after the close Thursday, included e-commerce software firm

BroadVision

(BVSN) - Get Report

and

Inktomi

(INKT)

, which makes Internet search and traffic-control technology. BroadVision was lately down 9.1% to 41, while Inktomi was up 0.6% to 130.

And

Eastman Kodak

(EK)

reported earnings in line with estimates, but more importantly, it said it was on track for 6% to 7% sales growth for the full year.

Salomon Smith Barney

recently lowered its rating on the company to outperform from buy on concerns that possible drops in film prices could hurt earnings in the second half of this year and early 2001.

Elsewhere in the market, index portfolio managers have a lot to do in the next week. Not only will they be hungry for

JDS Uniphase

(JDSU)

, they'll also want to grab shares of handheld-computer maker

Palm

(PALM)

.

Standard & Poor's

announced there is more shuffling to be had. Thursday night after the close, S&P said Palm would replace its former mother company

3Com

(COMS)

in the S&P 500 index.

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Market Internals

Breadth was negative on moderate volume.

New York Stock Exchange: 1080 advancers, 1,661 decliners, 693.3 million shares. 63 new 52-week highs, 37 new lows.

Nasdaq Stock Market: 1,277 advancers, 2,486 decliners, 1.1billion shares. 56 new highs, 65 new lows.

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Most Active Stocks

NYSE Most Actives

Lucent : 29.1 million shares.
Agilent (A) - Get Report: 21.5 million shares.
AT&T (T) - Get Report: 15.6 million shares.

Nasdaq Most Actives

Ericsson: 77.9 million shares.
JDS Uniphase (JDSU) : 47.5 million shares.
Sun Microsystems (SUNW) - Get Report: 32.9 million shares.

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Sector Watch

Financials were weaker in afternoon trading, after getting a lift through the morning from Greenspan's soothing words on the state of the economy yesterday during his testimony before Congress. The

Philadelphia Stock Exchange/KBW Bank Index

was edging down 1.4%.

Lately, the brokers turned slightly positive, with the

American Stock Exchange Broker/Dealer Index

up 0.04% after rising 2.6% to 566 yesterday. Morgan Stanley Dean Witter's 4.1% gain made a valuable contribution to the index.

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Bonds/Economy

Treasuries are slightly lower on extremely light volume, surrendering a small portion of yesterday's

Humphrey-Hawkins inspired gains.

There are no major economic data today, but the dollar is sharply higher against the yen and oil is down for the second day in a row.

The benchmark 10-year Treasury note lately was up slightly, 1/32, at 103 17/32, lifting its yield to 6.008%.

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International

European markets continued to tank along with the U.S. markets in early afternoon trading. They were originally under pressure following an earnings warning from Ericsson.

London's

FTSE

lost 90.6, or 1.4%, to 6378.4.

Across the channel, Frankfurt's

Xetra Dax

was down 86.19, or 1.2%, to 7393.95 and the Paris

CAC

dropped 99.65, or 1.5%, to 6464.12.

The euro was lately trading at $0.9372.

Asian markets were mixed overnight.

Back from a one-day holiday, the Tokyo market was hit by weakness in Japanese electronics-makers, a week before their first-quarter earnings results are released. The market was already depressed about recent corporate failures. The

Nikkei 225

index shed 172.08, or 1%, to close at 16,811.49,

With dealers worried about the long-term economic scenario in Japan due to bankruptcy fears, the greenback edged higher against the yen in Tokyo trading to 108.54. The dollar was recently trading at 108.75 yen.