After two days of ripping it up, the major indices succumbed to selling pressure today, led by revenue warnings from telecommunications provider

WorldCom

(WCOM)

and semiconductor manufacturer

Altera

(ALTR) - Get Report

, both of which ended the day with 20% losses.

WorldCom

warned fourth-quarter earnings would fall between 34 and 37 cents a share, much lower than the

First Call/Thomson Financial

49-cent consensus. It also announced, similar to

AT&T

(T) - Get Report

, its intention to split into distinct units to refocus its business. The stock lost $4.81 to $18.94, a 20% loss, on 192 million shares traded, approximately 10% of all volume on the

Nasdaq Stock Market, and the third-highest one-day volume for a stock in the history of the Nasdaq.

Meanwhile, chip maker Altera dropped after issuing its own fourth-quarter earnings

warning. The stock fell $8.38 to $32.56, or 20.5%.

But the woes in these two individual names didn't put a damper on market sentiment. The Nasdaq finished down just 36 points today with nearly two billion shares traded, and though the

Dow Jones Industrial Average finished off 71.67 points, the index still sits at 10,899.47, a level not seen since mid-September. Investors' belief that the economy and earnings growth will retain strength despite a mild slowdown is growing, and therefore, the overall market has displayed strength since dropping sharply the morning of Oct. 18.

"Anybody who may have misled themselves that days like yesterday would be a straight-line event maybe don't belong in the market to begin with," said David Sowerby, portfolio manager at

Loomis Sayles

. "In these cases, there's a phrase that's used -- the pause that refreshes -- but you still have two weeks of what's been a very good market."

Today was only the second decline on the Dow in the last 10 trading days. In the last two weeks, investors resumed their purchase of blue-chip and cyclical stocks on the thinking that those names were undervalued. Technology stocks followed suit yesterday after coming under fire for weeks. And while the tech-heavy Nasdaq isn't anywhere near the frothy levels of early 2000, there's an underlying feeling that the market has, for now, seen the worst of it.

Not that it means certain sectors, from time to time, aren't going to get pummeled. Telecommunications stocks were absolutely crushed, thanks to WorldCom.

Sprint

(FON)

dropped 9.8% today, AT&T lost 5%, and

British Telecom

(BTY)

dropped 3.8%. The

Nasdaq Telecommunications Index

fell 2.7%.

Semiconductors, not surprisingly, were also in tatters today. The

Philadelphia Stock Exchange Semiconductor Index

lost 3.8%, led by the losses in Altera and fellow equipment maker

Xilinx

(XLNX) - Get Report

, which dropped 6.9%, and

Applied Materials

(AMAT) - Get Report

, which lost 3.5%.

Other big-cap technology stocks were mixed.

Cisco

(CSCO) - Get Report

gave back a good lot of yesterday's gains, losing $1.75 to $52.13;

Oracle

(ORCL) - Get Report

dropped $1.63 to $31.38.

The same can be said for the New York Stock Exchange's behemoths. Financial stocks dropped after

Salomon Smith Barney

cuts its earnings estimates on several brokerages. One of them,

Lehman Brothers

(LEH)

, lost 5.6% today.

Consumer products stocks waned again today after

Procter & Gamble's

(PG) - Get Report

earnings report yesterday. That stock dropped 3.4% today;

Colgate Palmolive

(CL) - Get Report

lost 3.2%.

The market's recent activity, with the Dow reaching levels not seen in a month and the

S&P 500 improving to early October levels, has investors wondering what will come next. The election will be over soon, and it won't function as a shackle (or an excuse) for the market anymore. Right now, there seems to be little to motivate the market other than self-serving blather about the historically strong performance of stocks in the November-January period.

"It was such a big day yesterday, that it's not surprising we're giving some back today," said Robert Lee, senior vice president of

Sentinel Advisors

in Montpelier, Vt. "I do think things will start to settle in the next two months."

Market Internals

Breadth was negative on strong volume.

New York Stock Exchange: 1,411 advancers, 1,466 decliners, 1.2 billion shares. 62 new 52-week highs, 41 new lows.

Nasdaq Stock Market: 1,829 advancers, 2,115 decliners, 1.988 billion shares. 59 new highs, 101 new lows.

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Most Active Stocks

NYSE Most Actives

  • AT&T: 27.3 million shares.
  • Lucent Technologies (LU) : 26.3 million shares.
  • Nortel Networks (NT) : 24.9 million shares.

Nasdaq Most Actives

  • WorldCom: 191.8 million shares.
  • Cisco: 74.8 million shares.
  • Oracle: 61.4 million shares.

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Sector Watch

Oil and oil service stocks rallied sharply on rising oil prices, but other commodity-related indices were lousy. The Philadelphia Stock Exchange Oil Service Index gained 5.9% today, led by gains in

R&B Falcon

(FLC) - Get Report

, which rose 6.5%, and

Schlumberger

(SLB) - Get Report

, which gained 5.3%.

The

S&P Chemical Index

dropped 1.9% and the

Philadelphia Stock Exchange Forest & Paper Products Index

lost 2.3%.

The announcement of a content agreement between

Yahoo!

(YHOO)

and

Dow Jones

(DJ)

lifted the former today, and brought the rest of the Internet stocks with it. Yahoo! rose 10% today on 17 million shares traded, while

eBay

(EBAY) - Get Report

gained 4.9%.

TheStreet.com Internet Sector

index gained 3.9%.

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Bonds/Economy

Bonds were firmer today, with traders continuing to expect that this week's economic data will show further signs of a slowing economy and underpin the bond market's strong performance.

The benchmark 10-year

Treasury note is at 100 1/32, up 4/32, to yield 5.744%.

The 30-year

Treasury bond is at 106 19/32, 3/32 higher, to yield 5.781%.

The October

Purchasing Managers' Index

(

definition |

chart |

source

) fell to 48.3 from 49.9 in September.

The

Mortgage Applications Survey

(

definition |

chart |

source

) for the latest week rose to 654.6 from 587.2 in the prior period.

Construction spending

(

definition |

chart |

source

) for September rose 2.4%, after a 1.8 % gain in August.

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International

The major European indices were mixed at the close.

The

FTSE 100

in London turned around to end on the upside. It ended up 19.20 to 6457.60

The

CAC 40

in Paris rose 11.39 to 6409.05, while the

Xetra Dax

in Frankfurt ended off 18.37 to 7059.07.

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

battered euro continued to rise. It was lately at 0.8610.

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 108.15.

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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