Treasury Selloff Sends Stocks Tumbling

The major indices had spent most of the day in positive territory.
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An afternoon selloff in the Treasury market sent stocks sharply lower after spending a good portion of the session on the plus side.

Blame for the Treasury market's tumble was slapped on lousy demand for today's $15 billion two-year note auction. The 30-year bond was down 1 3/32, to 96 7/32, yielding 5.509%.

The

Dow Jones Industrial Average

gave up 144.75, or 1.5%, to 9399.67. The

S&P 500

dropped 17.77, or 1.4%, to 1253.41.

The

Nasdaq Composite Index

fell 36.95, or 1.6%, to 2339.40.

The

Russell 2000

slipped 3.74, or 0.9%, to 395.27.

TheStreet.com Internet Sector

surrendered 8.79, or 1.7%, to 505.74, while

TheStreet.com E-Commerce Index

drooped 1.99, or 2%, to 95.72.

Meanwhile,

Federal Reserve

Chairman

Alan Greenspan

earlier this afternoon completed his

Hawkins-Humphrey

testimony before the

House Banking Committee

.

On the

New York Stock Exchange

decliners beat advancers 1,767 to 1,202 on 769 million shares. On the

Nasdaq Stock Market

losers beat winners 2,379 to 1,623 on 920 million shares.

On the NYSE, 78 issues set new 52-week lows while 51 touched new highs. On the Nasdaq, 74 issues set new lows while new highs totaled 66.

On the Big Board,

America Online

(AOL)

was most active with 23.1 million shares changing hands. It was down 7/16 to 87 9/16.

On the Nasdaq,

Ciena

(CIEN) - Get Report

was most active on 27.7 million shares. It was up 2 1/2, or 10.2%, to 27 1/8.

BancBoston Robertson Stephens

upgraded its recommendation to buy from long-term attractive following a Ciena presentation at BancBoston Robertson Stephens' technology conference.

TheStreet.com

has been providing

coverage of the gathering this week.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

2:55 p.m.: Stocks Fall from Session Highs

Stocks eased off their best levels of the day and the

Dow Jones Industrial Average

slumped into negative territory, while Treasuries slumped after holding firm through most of the session.

Meanwhile,

Federal Reserve

Chairman

Alan Greenspan

earlier this afternoon completed his

Hawkins-Humphrey

testimony before the

House Banking Committee

.

The Dow was down 23 to 9521. The Dow around 10 a.m. EST pierced the 9600 level, rising 55.71 to 9600.13, before easing off. Around 1:40 p.m. EST, the Dow nearly reached its session highs but then came off that level and kept falling to its recent negative level.

The

S&P 500

was up 2 to 1273. The

Nasdaq Composite Index

was up 10 to 2386. The

Russell 2000

was up fractionally at 399.

TheStreet.com Internet Sector

was up 7 to 521.

Yahoo!

(YHOO)

was the biggest gainer in the index, up 5, or 3%, to 158.

TheStreet.com E-Commerce Index

was up 1 to 98.

Transportation continued sharply higher. The

Dow Jones Transportation Average

was up 2%, led by

FDX

(FDX) - Get Report

, which was up 5 3/8, or 6%, to 95 1/4.

Meanwhile in the bond market, the 30-year bond was down 22/32 to 96 20/32, yielding 5.48%.

While stocks were mostly higher and have made nice advances this week, there are still plenty of market participants out there who are less than enamored by the market in its current state.

The poor shape of the bond market is one thing that has some cautious.

For the stock market to break out on the upside, bonds will have to do better, said John Roque, senior analyst at

Arnhold & S. Bleichroeder

, in an interview this morning.

Roque said if the Treasury bond futures contract is able to get above 124 then stocks "could put in a pretty nice rally."

The March Treasury bond futures contract was recently down 10/32 to 122 16/32.

On the

New York Stock Exchange

, decliners were beating advancers 1,920 to 1,833 on 569 million shares. On the

Nasdaq Stock Market

, losers were beating winners 2,138 to 1,756 on 688 million shares.

On the NYSE, 47 issues had set new 52-week lows while 55 had touched new highs. On the Nasdaq, 58 issues had set new highs while new lows totaled 56.

On the Big Board,

America Online

(AOL)

was most active with 17 million shares changing hands. It was up 1 5/8 to 89 5/8.

On the Nasdaq,

Ciena

(CIEN) - Get Report

was most active on 22 million shares. It was up 3 5/16, or 13%, to 28.

BancBoston Robertson Stephens

upgraded its recommendation to buy from long-term attractive following a Ciena presentation at BancBoston Robertson Stephens' technology conference.

TheStreet.com

has been providing

coverage of the gathering this week.

1:54 p.m.: Nasdaq Driving Other Indices Higher

The major stock gauges were riding in the neighborhood of their intraday highs, as the

Nasdaq Composite Index

paced the market higher.

The Nasdaq Comp was up 29 to 2405.

Meanwhile,

Federal Reserve

Chairman

Alan Greenspan

recently completed his

Hawkins-Humphrey

testimony before the

House Banking Committee

.

The

Dow Jones Industrial Average

was up 51 to 9596. The

S&P 500

was up 12 to 1283. Small caps lagged. The

Russell 2000

was up just 2 to 401.

TheStreet.com Internet Sector

was up 9 to 524, while

TheStreet.com E-Commerce Index

was up 1 to 99.

Transportation stocks were sharply higher. The

Dow Jones Transportation Average

was up 3%, led by

FDX

(FDX) - Get Report

, which was up 6, or 7%, to 95 7/8.

The 30-year Treasury bond was up 1/32 to 97 11/32, yielding 5.44%.

On the

New York Stock Exchange

, advancers were beating decliners 1,597 to 1,214 on 452 million shares. Despite the gains in the Nasdaq Comp, breadth on the

Nasdaq Stock Market

was slightly negative. Losers were beating winners 1,920 to 1,833 on 569 million shares.

On the NYSE, 47 issues had set new 52-week highs while 45 had touched new lows. On the Nasdaq, 55 issues had set new highs while new lows totaled 47.

Elsewhere in the news,

Charles Schwab's

(SCH)

online trading system broke down for about an hour this morning before service resumed. However, the company's stock was up 3/4 to 73 9/16.

TheStreet.com

wrote about the situation

this afternoon.

On the Big Board,

America Online

(AOL)

was most active with 15 million shares changing hands. It was up 2 5/8 to 90 5/8.

On the Nasdaq,

Ciena

(CIEN) - Get Report

was most active on 19 million shares. It was up 3 15/16, or 16%, to 28 9/16.

BancBoston Robertson Stephens

upgraded its recommendation to buy from long-term attractive following a Ciena presentation at BancBoston Robertson Stephens' technology conference.

TheStreet.com

has been providing

coverage of the gathering this week.

Company Focus: Gateway

Gateway

(GTW)

, whose shares have risen sharply so far this year, announced at an analysts meeting today that it will provide one year of Internet access with the purchase of Gateway consumer desktop, portable and convergence systems purchased for more than $1,000.

Gateway was down 1 5/8 to 80 7/8. However, consider this: the stock closed at 51 3/16 on Dec. 31.

Gateway also announced it has formed a strategic alliance with

NECX Office and Personal Technology Center

, the e-commerce subsidiary of

NECX

, a high technology products company. Gateway has purchased a minority stake in the e-commerce subsidiary, amounting to 19.9% of the company's value. Gateway also has the option of making a subsequent investment in the future.

1:01 p.m.: Midday Musings: Stocks Enjoy Increasing Strength as Leadership Struggle Continues

11:57 a.m.: Transportation Sector Jumps

Stocks were higher late this morning as the

Dow Jones Transportation Average

was turning in a fine performance.

The Dow transportation average was up 2%.

FDX

(FDX) - Get Report

was pacing the average, up 5 1/8 to 95.

The

Dow Jones Industrial Average

was up 30 to 9575. The

S&P 500

was up 8 to 1279. The

Nasdaq Composite Index

was up 13 to 2390. The

Russell 2000

was up 1 to 400.

TheStreet.com Internet Sector

was up 4 to 518.

Infoseek

(SEEK)

was the biggest gainer in terms of value in the index. It was up 4, or 6%, to 75 5/16. More on Infoseek below.

TheStreet.com E-Commerce Index

was up fractionally at 98.

The 30-year Treasury bond was up 2/32 to 97 12/32, yielding 5.43%.

Meanwhile,

Federal Reserve

Chairman

Alan Greenspan

is in the question-and-answer period in his

Humphrey-Hawkins

testimony before the

House Banking Committee

. Yesterday he testified before the

Senate Banking Committee

.

On the

New York Stock Exchange

, advancers were beating decliners 1,469 to 1,182 on 290 million shares. On the

Nasdaq Stock Market

losers were beating winners 1,774 to 1,669 on 364 million shares.

On the NYSE, 38 issues had set new 52-week highs while 30 had touched new lows. On the Nasdaq, 45 issues had set new highs while new lows totaled 28.

On the Big Board,

America Online

(AOL)

was most active with 11 million shares changing hands. It was up 1 7/8 to 89 7/8.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active on volume of 12 million shares. It was down 1 to 81/16.

Tech Focus

The

Philadelphia Stock Exchange Semiconductor

Index was leading the major tech indices on the upside. It was up 2%. Elsewhere, the

Morgan Stanley High-Tech 35

was up 1%, while the

Nasdaq 100

was up 1% and the

Philadelphia Stock Exchange Computer Box Maker Index

was flat.

In the online brokerage world,

Charles Schwab's

(SCH)

online trading service crashed for a while this morning. Nevertheless, Schwab's stock was up 1 to 73 13/16.

Infoseek today launched

GO Shop

, which it says is a comprehensive one-stop online shopping service. GO Shop can be found via the

GO Network

portal site. Infoseek said GO Network is the first Internet portal to allow shoppers to instantly shop for products that are directly related to whatever they are doing on

GO.com

. In January Infoseek, in partnership with

Disney

(DIS) - Get Report

. launched GO Network. Disney was up 1 to 35 7/8.

Meanwhile,

Bluefly

(BFLY)

said it has signed a pact with Infoseek's GO Network, under which GO Network will "prominently" feature Bluefly's selection of clothing and fashion accessories on the GO Shop home page and throughout the apparel and jewelry department and search results pages. Bluefly jumped 3 5/8, or 35%, to 13 7/8 on the news.

Elsewhere in tech news,

BancBoston Robertson Stephens'

16th annual

Technology Conference

continues today.

Gateway

(GTW)

announced today it will offer Internet access to personal computer buyers for one year. However, customers will have to buy a PC system worth more than $1,000 to qualify. Gateway was down 15/16 to 81 9/16.

10:57 a.m.: Stocks Cling to Slight Gains

The major market barometers were higher, while transportation stocks were soaring, paced by

FDX

(FDX) - Get Report

, which jumped 4 13/16 to 94 11/16.

The

Dow Jones Transportation Average

was up 2%.

Delta Air Lines

(DAL) - Get Report

was also a big transportation average winner, surging on positive comments from

Merrill Lynch

. Delta was up 3 7/8 to 61 13/16. Merrill named Delta its focus one stock of the week.

Meanwhile,

Federal Reserve

Chairman

Alan Greenspan

has entered the question-and-answer period in his

Humphrey-Hawkins

testimony before

House Banking Committee

. Yesterday he testified before the

Senate Banking Committee

.

Elsewhere, the Dow industrial average was up 5 to 9549, while the

S&P 500

was up 4 to 1275.

The

Nasdaq Composite Index

was up 4 to 2380. The small-cap

Russell 2000

was up 1 to 400.

TheStreet.com Internet Sector

was up 1 to 516.

TheStreet.com E-Commerce Index

was up fractionally at 98.

"I thought Monday's performance was impressive," said Louis Todd, head of equities trading at

J.C. Bradford

, citing an improvement in the market's underpinnings, including a big increase in favor of advancers over decliners and a pickup in the number of stocks hitting new highs, while the number of new lows is declining.

On Monday, the Dow rallied 2.3%, while the S&P 500 rose 2.6% and the Nasdaq Comp jumped 2.7%.

"I think we're in for a nice little rally," he said, "even though

interest rates are going against us." He noted that if the 30-year Treasury bond's yield rises to 5.50%, the stock market "might react to that negatively."

He interpreted Greenspan's comments yesterday overall were negative, particularly for the bond market, which sold off sharply.

He said he is seeing investors coming into the market on bargain-hunting sprees.

The benchmark 30-year bond was up 7/32 to 97 17/32, yielding 5.42%.

Market internals were positive.

On the

New York Stock Exchange

, advancers were beating decliners 1,359 to 1,097 on 190 million shares. On the

Nasdaq Stock Market

losers were beating winners 1,550 to 1,476 on 248 million shares.

On the NYSE, 31 issues had set new 52-week highs while 23 had touched new lows. On the Nasdaq, 34 issues had set new highs while new lows totaled 23.

Immunex

(IMNX)

was a big loser on the Nasdaq, falling 7 7/8, or 5%, to 150 1/2. Yesterday the company announced plans yesterday for a 2-for-1 stock split effective March 25 for shareholders of record March 11.

On the Big Board,

America Online

(AOL)

was most active with 8 million shares changing hands. It was up 1 7/16 to 89 7/16.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active on volume of 8 million shares. It was down 1 5/8 to 85 7/16.

9:56 a.m.: Stocks Rise Modestly at Open

Stocks were slightly higher early on while

Federal Reserve

Chairman

Alan Greenspan

will conclude his semiannual

Humphrey-Hawkins

testimony today when he appears before the

House Banking Committee

.

As expected, his prepared remarks today appear the same as those he delivered to the

Senate Banking Committee

yesterday. His testimony is slated to begin at 10 a.m. EST.

The

Dow Jones Industrial Average

was up 44 to 9589. The

S&P 500

was up 7 to 1278.

The

Nasdaq Composite Index

was up 10 to 2386. The

Russell 2000

was up 2 to 401.

TheStreet.com Internet Sector

was up 8 to 522.

TheStreet.com E-Commerce Index

was up 1 to 99.

The benchmark 30-year Treasury bond was up 2/32 to 97 12/32, yielding 5.43%.

Most Up at Open -- NYSE

Nokia (NOK.A) , up 3 13/16 to 141 7/8

.

Most Up at Open -- Nasdaq

Infoseek (SEEK) , up 4 5/8 to 75 7/8

: The company launched

GO Shop

, which it says is a comprehensive one-stop online shopping service. GO Shop can be found via the

GO Network

portal site. Infoseek said GO Network is the first Internet portal to allow shoppers to instantly shop for products that are directly related to whatever they are doing on

GO.com

. In January Infoseek, in partnership with

Disney

(DIS) - Get Report

, launched GO Network.

Most Down at Open -- NYSE

American International Group (AIG) - Get Report, down 1 7/16 to 118 1/2

.

Most Down at Open -- Nasdaq

Immunex (IMNX) , down 3 13/16 to 154 3/4

: The company announced plans yesterday for a 2-for-1 stock split effective March 25 for shareholders of record March 11.