Investors are ready to sell if the news is too good, and investors are ready to sell if the news is too bad.

Yesterday the news was too good. The unemployment rate came in at a benign 4.2 percent, and the construction and financial services sector actually added jobs.

That signaled to the market that the Federal Reserve might not have to lower rates before its next meeting in the second half of next month. That's why the Dow Jones industrial average slumped 119.53 to 10,864.10, and the Nasdaq tumbled 122.29 to 2,660.50. The S&P; 500 slid 24 points to 1,349.47.

The market is also on the lookout for any news that would indicate that the slowdown will be deeper, or last longer, than the brief dip currently expected.

"We're in a period with two countervailing forces at work - on any given day either one can prevail," said Clark Yingst, equity strategist at Prudential Securities. "It's going to be a tug of war for the time being."

There was also an element of healthy profit-taking, according to some strategists. "Why not take a few bucks off the table now?" asked Larry Rice, equity strategist at Josepthal & Co. "The fact that the market hit 11,000 was a signal to sell stocks."

Going forward, Rice advocates selling into the rallies for those who want to aggressively trade the market. "Stay nimble," he advised. "There will be better opportunities at the end of the first quarter."

But for those investors who want to take a long-term view, rather than buying the troughs and buying the peaks, Rice sees value in some personal computer makers, like Gateway, and some pharmaceutical stocks, like Merck. He does not recommend buying retailers just yet, but he does recommend buying them on dips.

Gateway tumbled $1.02 yesterday to $19.71, while Merck & Co. tumbled 51 cents to $83.97.

Other defensive stocks continued to show strength. In the Dow, Johnson & Johnson rose $1.23 to $95.10, while McDonalds eked out a 40 cent gain, closing at $29.43.

Techs in and out of the Dow got killed. IBM, which tumbled $3.78 to $110.27, and Intel, which traded down $2.13 to $35.69, were two of the Dow's biggest losers. On the Nasdaq, JDS Uniphase slumped $5.81 to $50, and Cisco slumped $2.75 to $35.50.

Medium term there are still plenty of optimists willing to boost techs, however. Prudential's Yingst is one of them. "Ultimately, it's going to be the lower rates that will drive the markets higher," he predicted.

The government is far better placed to stimulate the economy than during most past slowdowns, Yingst added. Inflation remains low, giving the Fed plenty of scope to lower interest rates, while the government surplus gives the Treasury the option to lower taxes and pay back the national debt. Both actions should help stimulate the economy.