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[BRIEFING.COM] Mid-afternoon, the market fell out of what had been a very narrow trading range that surrounded the unchanged mark. Behind the equity market's fall was a rise in Treasury yields. Specifically, the yield on the benchmark 10-year jumped to 4.74% - a level not seen since June of 2004. A second factor behind today's losses was a drop in crude. The broader market failed to take a bullish cue, and selling across the Energy sector resulted in a market-dragging 2.8% loss.

The global interest rate environment continues to weigh on bond traders' sentiment. Additionally, economists' expectations for a solid February employment report, which is due out on Friday, added to Treasuries' troubles. The rate-sensitive Utilities sector took a hit and registered a 2.2% loss. As mentioned, it was the Energy sector that weighed heaviest. Prices across the energy complex were substantially lower. Crude futures ended their four-day gaining streak and dropped 2.3% on oversupply concerns. Several OPEC ministers today asserted that the cartel will maintain supply levels at its meeting on Wednesday. Additionally, the IAEA's chief helped to somewhat soothe geopolitical-driven supply concerns by announcing that a deal with Iran may be soon reached. Making matters worse for the Energy sector, Wachovia downgraded the integrated natural gas industry to Market-Weight from Overweight.

Seven other sectors also booked losses. The more defensive Consumer Staples and Healthcare sectors were amongst them, but demonstrated some relative strength. Upgraded Millipore (MIL 71.80 +3.18) shares were a particular bright spot that supported the latter. Despite the Treasury market action, the Financial sector again showed some resilience. Its decline lent some muscle to the broader market's fall, but, as it pared its loss, the indices moved off of their lows. Due to wide-spread selling, Technology (-0.7%) was an influential laggard. Semiconductors were a particular sore spot, but Texas Instruments (TXN 32.39 +0.10) outperformed ahead of its after hours mid-quarter update. On a related note, BlackBerry maker Research in Motion (RIMM 82.76 +10.84) settled its patent dispute with NTP.

The Telecommunications sector (+1.8%) was the lone advancer. A flurry of merger and acquisition news captured investors' attention, and a blockbuster $67 billion merger between AT&T (T 27.02 -0.97) and BellSouth (BLS 34.47 +3.01) occupied the spotlight. The deal will create the world's largest telecom company with a market cap of as much as $170 billion. AT&T anticipates synergies of $18 billion, and the purchase gives it full ownership of Cingular Wireless - the number one mobile-phone company in the U.S. As the deal fueled speculation over more telecom consolidation and integration, many telecom stocks attracted buyers. Verizon (VZ 33.71 +0.13) got some added attention and announced that it is working to acquire Vodafone's (VOD 21.90 +0.90) 45% stake in Verizon Wireless. One stock there that did not advance was AT&T, due in part to typical integration concerns that the acquiring company faces, and also because of the fact that it paid an 18% premium for BellSouth shares.

Other deals announced included Education Management Corp.'s (EDMC 41.64 +4.66) $3.4 billion buyout, J.P. Morgan's (JPM 41.43 -0.16) approximate $1.5 billion purchase of Kohl's (KSS 50.53 +1.73) credit card business, and General Motors' (GM 19.80 +0.59) sale of most of its Suzuki stake. The GM transaction is expected to generate about $2 billion in cash, and news of it helped limit declines in both the Dow and Consumer Discretionary sector (-0.5%).

Separately, Factory Orders fell a less than expected 4.5% in January. That data was the only item on the economic calendar, and ha