The U.S. equity market opened sharply lower this morning, and has been struggling to pare its losses.  The drop is largely attributed to a weak business outlook from tech-leader Cisco (CSCO - Free Analyst Report). Shares of Cisco are down about 15% on a large volume move, but now seem to be finding some equilibrium at this level. The bellwether tech giant is important to traders, since it sets a tone for the entire sector. The tech sector is clearly the worst performing area, down nearly 2% for the session. Some notable tech stocks trading lower today include Dell (DELL) and Jabil Circuit (JBL). There is also significant weakness in the financial sector. The Bank of Ireland (IRE) is off sharply. The financial situation in that country continues to dominate the news. Although in negative territory, the energy sector has been showing some relative strength, owing to gains in the coal issues, including Arch Coal (ACI). Also, the integrated oil and gas producers, such as Chevron (CVX - Free Analyst Report), are holding up well.

It has been a relatively quiet day for economic releases, largely because it of veteran’s day observance. Tomorrow will also likely be a light day, except for the release of the University of Michigan sentiment figures.

Meanwhile, some traders are keeping an eye on the G-20 summit taking place today and tomorrow in Seoul, South Korea. Trade balances and currency values are a large topic of conversation. Some countries are not happy with U.S. monetary policy. The meeting comes on the heels of an announcement that the Fed will continue its quantitative easing plan. Ultimately, the Fed’s Treasury and agency purchases are designed to lower interest rates. The idea is to spur borrowing and lending, in an effort to create economic momentum. In addition to providing liquidity, this would make fixed-income investments less attractive to large institutions, creating an environment that favors stocks. However, there may be some problems with the program. As far as spurring corporate expansion, many corporations do not need to borrow, since they have substantial cash balances already. Moreover, the program continues to weaken the U.S. dollar, which may stimulate exports sales, but could drive costs higher for corporations that manufacture overseas.

Nonetheless, the U.S. dollar index is trading slightly higher today. Given that the dollar and the stock market have been inversely correlated lately, this may be contributing to the weakness in equities today. Elsewhere, commodities, such as oil and gold, are rallying today, despite the higher dollar.

The market, which has had a good run, may be set to take a breather, if not pull back. It is important to watch the market leaders. When they start to falter, it is usually a sign of some underlying weakness. There is a bit more fear in the marketplace, as the VIX, which is still below 20, has spiked about 3.7% today.