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[BRIEFING.COM] For most of the day, the stock market traded in mixed fashion and within a relatively narrow range. The Dow managed to close with a modest gain, but the S&P and Nasdaq did not fare as well.

There were two primary factors behind today's bearish bias. First, interest rates are rising on a number of fronts, and they are raising a host of concerns. As it's creating anxiety over higher mortgage rates causing a deceleration in consumer spending, the benchmark 10-year note has occupied the spotlight. Yesterday, the market dropped as that note jumped to a 4.74% yield. Bond sellers took somewhat of a breather and Treasuries recovered some ground today, but the fact that the 10-year's yield is still at a 20-month high remains. Due to our expectation that rising interest rates will keep the stock market's upward momentum in-check, we modified our market view to Neutral last month. Interest rates are likely to head higher, and the market now foresees two - and possibly three - more hikes to the Fed funds rate.

Texas Instruments (TXN 31.28 -1.05) was the second factor. With its mid-quarter update, the chip bellwether disappointed the market. TI narrowed its guidance with an upward bias, and its EPS and revenue estimates were in-line with current consensus estimates. But with shares gaining almost 9.0% over the last week, expectations had been running high. Its disappointment relative to expectations gave investors a reason to take profits across the tech board. Semiconductors weighed particularly heavily on the sector and on the Nasdaq. TI's update, in our view, evidenced healthy industry trends, and we feel that the company is well-positioned to benefit from growth trends in key product areas. Our Overweight rating on the Tech sector is predicated on a theme of "everything digital, everything portable," and Qualcomm (QCOM 47.86 +0.62) further validated that today. Crediting better than expected demand, the company upped its guidance. Qualcomm also hiked its quarterly dividend 33%. On a related note, Sprint Nextel (S 24.89 -0.41) reaffirmed its 2006 financial targets. That news appeared to be largely overlooked, however, as traders focused on securing some of the Telecom sector's (-1.6%) recent, sizeable gains.

In anticipation of what is expected to be OPEC's decision tomorrow to maintain current levels of production, crude extended its decline and dropped 1.5%. Prices across the energy complex were lower. On a side note, natural gas did recover from its nine-month low. As a result of supply expectations and energy price action, the Energy sector took a hit. Its 1.2% loss weighed heavily upon the broader market. Chevron's (CVX 55.32 -0.53) comments during its analyst day were generally bullish for the oil services industry, but were overshadowed by the impending OPEC meeting and weekly crude inventory report. A UBS downgrade on the oil tanker industry did not help Energy's situation today. Commodities across the board were weak, and also sparked selling across the Materials sector (-0.9%).

A jump in General Motors (GM 20.28 +0.47) helped take the Dow higher this afternoon. The company announced a restructured employee benefits plan that is expected to reduce its pre-tax pension expense by about $420 million in 2007. Despite the bearish bias, there were some other pockets of relative strength. More defensive areas of the market received some added attention. Managed care stocks helped the Healthcare sector (+0.2%) stay positive, and the Consumer Staples sector (+0.4%) also advanced. Ultimately, however, the equity market continues to struggle with sustaining upward momentum amid the current interest rate environment.
NYSE Adv/Dec 878/2378...Nasdaq Adv/Dec 903/2123