Call U.S. Sen. Alfonse D'Amato a contrarian indicator.

After

Fed Chairman Alan Greenspan's

testimony today, the senator from New York predicted that the

Dow Jones Industrial Average

would jump 120 points. Instead, the Dow, down about 100 points twice during the day, dropped 55.03 to close at 6983.18. Other market indices followed. The

S&P 500

fell 6.35 to 805.68. The

Nasdaq Composite Index

dropped 7.14 to 1340.55. And the

Russell 2000

, which tracks small-cap stocks, slipped 2.94 to 363.85.

The bond market also had a lousy day. The benchmark 30-year Treasury bond fell 1 1/2 points to yield 6.77%.

In his testimony, Greenspan indicated that inflation will return at some point and that the Fed will have to boost interest rates, perhaps on a pre-emptive basis. He also questioned the heights the stock market has reached. "These gains have obviously raised questions of sustainability," he said.

"He's sending a clear message the he is concerned about levels of the equity markets," says Arthur Micheletti, chief economist and investment strategist at

Bailard Biehl & Kaiser

in San Mateo, Calif. In light of that, "what's surprising is that stocks didn't sell off worse," he said. The stock market was saved in the last hour because the bond market closed for trading, he said, so "bonds stopped applying downward pressure" on the stock market.

In the market today,

Dell

(DELL) - Get Report

pushed ahead on its the strength of its gangbuster earnings yesterday and a host of upgrades today. Its stock climbed 3 3/4 to 75 3/4. Other computer companies followed, including

Gateway 2000

(GATE)

, which added 3 1/4 to 64 5/8, and

Compaq

(CPQ)

, which rose 7/8 to 81 3/4.

McDonald's

(MCD) - Get Report

shook up the fast-food world by hinting that it will sharply cut prices. Its stock fell 2 3/8 to 44 7/8, while competitor

Wendy's International

(WEN) - Get Report

dropped 1 1/2 to 20 3/4.

Philip Morris

(MO) - Get Report

approved a 3-for-1 stock split and announced a three-year, $8 billion stock buyback. Its stock added 1/4 to 133 1/2

Lucent Technologies

(LU)

watched its stock fall 3 5/8 to 55 1/8 after

Smith Barney

analyst Anthony Langham said the company has "aggressive accounting practices ¿ difficulty in getting answers to probing questions and apparent problems in gross margin." He also downgraded the stock to neutral from outperform. Lucent said that its accounting practices are conservative and that it must keep some information private because of the competitive nature of its business. Investors also may have reacted negatively to

AT&T's

(T) - Get Report

announcement yesterday that it would re-enter the telecommunications equipment market, having spun off Lucent, an equipment concern, just last summer.

America Online

(AOL)

climbed 2 1/2 to 39 1/8 after its chief financial officer said he expects the company's current subscriber base of about 8 million to remain unchanged in the current quarter.

Centennial Technologies

(CTN)

didn't open today after a sharp run-up yesterday. The company said it will make an announcement tomorrow morning containing material information, most likely about its past financial results, which the company said "appear to be falsified."

Ipalco Enterprises

(IPL)

said its board approved a recapitalization plan that includes a self-tender offer to buy back as many as 12 million shares, or about 21% of its outstanding stock. The plan also includes cutting the quarterly dividend to 25 cents from 37 cents. In addition,

Goldman Sachs

upgraded the stock to market perform from market underperform.

Everen Securities

also raised its six-month rating to outperform from market performer. The energy company's stock rose 3 1/2 to 31 5/8.

Petrolite

(PLIT)

agreed to be acquired by

Baker Hughes

(BHI)

in a stock swap worth $61 for each Petrolite share. Petrolite is a specialty chemicals maker, while Baker Hughes sells oil and gas products. Petrolite's stock jumped 10 to 58 3/8. Baker Hughes' stock closed at 35 1/2, unchanged.

United Auto Group

(UAG) - Get Report

, which yesterday said it expects first-quarter net income will fall below analysts' projections of 25 cents per share, saw its rating cut to neutral from buy by

Smith Barney

and

ABN Amro Chicago

. Its stock fell 4 3/4 to 20.

CKE Restaurants

(CKR)

amended its dual-brand agreement with

GB Foods

, saying it will convert 306 of its Carl Jr.'s restaurants into Carl Jr.'s/Green Burrito restaurants over the next four years, up from an originally planned 140. CKE's stock slipped 4 3/8 to 19 7/8.

Applied Magnetics

(APM) - Get Report

, which is trying to take over

Read-Rite

(RDRT)

, had its rating cut to sell from portfolio buy by

First Albany

. Its stock fell 2 7/8 to 45 1/4.

Ortel

(ORTL)

watched its shares fall after it warned investors that a slowdown in domestic orders in the third quarter ended Jan. 21 may hurt its earnings over the next two quarters as well. Stock of the company, which makes products that enable transmission of signals over fiber-optic cable, was down 7 3/4 to 12 1/2.

Etec Systems

(ETEC)

dropped 6 3/4 to 37 3/4 after it delayed shipping its Polyscan products. Etec makes laser direct imaging pattern generation systems for the semiconductor and electronics industries.

LSI Logic

(LSI) - Get Report

was upgraded to short-term buy from hold by

SoundView Financial

. Its stock rose 7/8 to 35.

By Erle Norton

enorton@thestreet.com