By James Langton

(July 18 – 13:00 ET) – The U.S. CPI came out higher than expected on both headline and core rates today, and traders turned sour on stocks. Renewed inflation fears spell rate hike fears and weak stocks. The TSE 300 fell 114 points at midday to 10,730. Volume is average at 64.4 million shares, almost 2:1 in favour of sellers. Decliners outnumber advancers about 5:4.

It’s a revenge on the nerds market this morning, with biotechnology, technology and software stocks sliding. The old economy stocks are strong, led by the mines, and followed by transports, steels and energy utilities. Financials are weak, too.

The top losers this morning are a who’s who of the Canadian high tech business. Nortel Networks is off 2.3% in heavy trading, followed by losses in JDS Uniphase, 724 Solutions, Sierra Wireless, Alcatel, and Exfo Electro. Biotechs are weak yet again, with QLT leading the way, despite the fact that Lehman Bros. was out defending the stock this morning.

Other recent gainers such as Bombardier, TransCanada, BCE, Abitibi and TD Bank are all sliding today, too. Merrill Lynch is down sharply despite its blowout earnings and the promise of a stock split, usually positive signals.

Other companies with strong earnings, General Motors and Weyerhaeuser, are leading the gainers this morning, joined by Shell Canada, Veritas Energy and Cryptologic.

In business news, Ivanhoe Inc. has completed its buyout of Cambridge Shopping Centres Ltd. Labour Minister Claudette Bradshawis threatening Air Canada and its pilots with an independent special mediator to solve their labour troubles.

In New York stocks are down across the board. The Dow is off 78 points to 10,726. The NASDAQ composite is down 84 points to 4,191. The S&P 500 is down 14 points to 1496. The NASDAQ is sliding on trepidation over earnings out later today from Intel Corp. Qualcomm Inc., Microsoft and Apple also report today.

On the Dow, Aetna Inc. issued an earnings warning and saw its stock drop 13 %. Merrill Lynch & Co. is sliding despite strong earnings. Pessimisstic analysts ignored the good news and noted that its assets under management declined in the quarter. In fact, all the big banks reporting today have met, if not beaten, expectations only to see their stocks slide.

The CDNX makes the gloomy market unanimous. The CDNX is off 25 points to 3,362. Volume is rather strong at 18.8 million shares. Techs are weakest, although mines and energy are down, too. CGX Energy Inc. is the hot trader, off 50% to 28¢ on 1.6 million shares.