Investors must be starting to feel that TMT is short for torment. Another bad day for the technology, media and telecom sectors had investors regretting the enthusiasm they showed for such stocks in late 1999 and early 2000.

Profit warnings after the US close on Wednesday from Gateway, the personal computer manufacturer and Altera, a chip-maker, did the damage this time. Both the Dow Jones Industrial Average and the Nasdaq Composite opened with triple-digit losses and stayed heavily in negative territory while the London market was open.

At one point, the Techmark 100 index of leading UK technology stocks dipped below its lowest closing level. The Techmark was formally launched on November 4th, 2000, and the index's lowest close to date was 2,414.5 on November 5th.

In early trading yesterday, it slumped to 2,405.0 before recovering to close at 2,467.75. That still left the index down 70.36 on the day and 57 per cent below its all-time closing peak. In the last three sessions, the index has dropped 11.9 per cent.

The day was not all doom and gloom, however. Despite Wall Street's initial weakness, the FTSE 100 managed a strong rally in the afternoon, with the banking sector leading the way.

The blue chip benchmark ended the session down 22.7 at 6,142.2, having been 6,070 at its worst for the day. There were signs that buyers were willing to move into the market as the index dropped towards the bottom of its long-running trading range.

Mr Steve Russell, UK strategist at HSBC, points out that, excluding the TMT sectors, the UK market is close to an all-time peak. The Datastream ex-TMT index peaked at 4,077 on November 21st, a 29.5 per cent gain from the year low of 3,147.63, recorded on February 15th. As of Wednesday night, the "old economy" sectors were trading on a historic price-earnings ratio of just 17.4, well within historical norms.

While there was no major corporate news yesterday, the small and midcap sectors continued to be undermined by a series of profit warnings. DCS, NetBenefit and Plasmon were the latest culprits. Disappointing figures from QXL.com saw the Internet auction group's shares reach an all-time low.