By James Langton

(February 20 – 13:00 ET) – Canadian traders bought Nortel Networks CEO John Roth’s rap yesterday, but apparently U.S. traders aren’t so forgiving. Nortel is receiving another beating today, taking the Toronto market with it.

Any hope for another rebound day evaporated on the open this morning and the market has been falling ever since. The TSE 300 is down about 169 points at midday to 8,290. Volume is average at 76.1 million shares, with sellers outnumbering buyers 18 to seven. Losers are outnumber winners three to two.

Every TSE sub-index apart from real estate is either flat or down, with industrial products leading the way, off 5.8%. Golds, utilities and oils are also notably weak.

Nortel got an easy ride from Canadian traders yesterday, but once U.S. traders returned work this morning they began dumping the stock. Wall Street is showing less sympathy for Roth’s appeal to patriotism yesterday, and U.S. traders are proving unwilling to give the firm a pass on this one. The prospect of a slew of shareholder suits, and perhaps even litigation from bondholders and JDS Uniphase, is not helping the stock either.

A report that Cisco Systems CEO John Chambers said that the U.S. is indeed in recession, is also hitting the networkers. Nortel and JDS have also been slapped with fresh downgrades from Wall Street to boot.

On all this doom and gloom Nortel is down another 11% on heavy volume of 10 million shares. It is dragging the entire tech sector down with it. Losers include Exfo Electro, JDS, Descartes Systems, Sierra Wireless and Research in Motion.

Even Celestica is taking a battering despite announcing a deal to acquire manufacturing operations from telecom equipment supplier Avaya Inc. The deal, worth US$200 million, is part of a large five-year global supply agreement worth about US$4 billion in expected revenue. Under the deal, about 1,400 Avaya employees are expected to join Celestica.

Any buzz in stocks such as takeover targets Cypress Energy and Name Inc. is disappearing in heavy trading, as is appetite for Lorus Therapeutics.

The small crop of winners is a cross-section of old economy names from CN to Weyerhaeuser, Burlington, Precision Drilling, Weston and DaimlerChrysler. CP is gaining as it gets the message out about the value of its planned breakup.

In New York support for old economy stocks has been enough to keep a little black ink on the tape. At midday, the Dow Jones industrial average is up 17 points to 10,817. The Nasdaq composite index though is down 55 points to 2,371. The S&P 500 is off 11 ticks to 1290.

The Nasdaq is down on networking stocks and the spill over of their weakness to semiconductors and optics. Relatively strong reports from retailers is supporting the Dow.

The CDNX is in a slide today, too, off 25 points to 3,141. Volume is average at 17.1 million shares. Techs are driving the weakness with some help from miners. The oils are up a bit. Genoil Inc continues to be the top trader, up 14% to 16¢ on almost 1 million shares.