By James Langton

(October 18 – 13:00 ET) – Markets are bouncing off an opening slaughter that saw the TSE 300 slip below the 9,900 mark. At midday, after the selloff and bounce the TSE 300 is down just 91 points to 10,041.

Volume is light at about 62 million shares, and the market internals are more positive than they were yesterday, with volume about 7:5 in favour of sellers. Decliners are outpacing advancers 19:13.

On a sector basis, the TSE is split evenly between winners and losers. There is weakness in industrials, media stocks and consumers stocks such as software and engineering firms. Financials are down, too. Paper stocks are up sharply, pipelines and utilities are strong, while gold is up a bit.

Most TSE market action starts with Nortel Networks these days and today is no exception. The networking giant is off 2.3% on heavy volume of 5.7 million shares. Tech issues sold off aggressively across the board on news of poor results in IBM announced after the bell yesterday.

Nortel also announced that it would combine its high speed cable business with ANTEC Corp. in a new company to be named Arris Inc. Nortel will sell its 81.25% of Arris Interactive to the new company for 33 million shares in the new firm, to own about 46.5%, and US$325 million in cash.

With Nortel taking a hit, so are many of the techs. Alcatel has been rocked, declines are evident in Sierra Wireless, Psion, Microcell, MGI, Cognicase, Ballard Power and QLT.

Blue chip names such as Alcan and Bombardier are sliding notably.

The financials are also joining the selloff with TD Bank leading the trading, down about 1.5%. All the banks are weak, but the insurers and fund firms are holding up better.

BCE is keeping the utilities up, gaining more than 1%. Research in Motion continues to demonstrate resilience, while there’s also some strength in West Fraser Timber, Burlington, Shaw, Winpak and Dupont. Janna Systems is having a good day after reporting strong earnings.

Franco-Nevada is leading the golds higher, up 6.4% on massive trading in the firm with 3.8 million shares moving so far. The company has offered no explanation for the heavy action, except traders speculating about a deal.

In New York, stocks opened to what looked like an extremely ugly day. The Dow was off more than 400 points on the open, the Nasdaq composite was down 200. The ugly results from IBM, combined with strong inflation numbers and overseas tech selling combined to push mass selling on the open. Poor results in Chase also knocked chunks out of both Chase and J.P, Morgan shares.

Stocks soon stabilized, however, and bargain hunters returned. At midday stocks have clawed their way back, the Dow is down 135 points to 9,955. Nasdaq came all the way back, trading up nine points to 3,222. The S&P has dropped six points to 1344.

The big question is whether this selloff was the climax that will see stocks stabilize, or if there’s more bad news to come. The lack of volume indicates that today’s selling was not a full capitulation.

The CDNX is down 41 points to 3,234 on volume of 19.8 million shares. Techs and miners are leading the way down, oils are weak, too. Brazilian Resources Inc is the top trader up 10% to 55¢ on 1.5 million shares.