Today's Market: Dow Trading Higher in Early Action

(Updated from 9:41 a.m. EDT)

Tech investors aren't having a happy Thursday morning.

Equity markets, having lost all of its August gains in the first two and a half weeks of September, did get a boost this morning from one of its most long-term bullish names, Goldman Sachs' chief strategist Abby Joseph Cohen. The Goldman strategist today reiterated her current equity allocation and said the market's concerns about oil, the euro and earnings are "overdone." She said the intermediate and long-term view on the market remains "bright."

The Dow Jones Industrial Average , which was initially lower in early action, was latley 56 higher to 10,741. The Nasdaq Composite Index was off 7 to 3891. And the S&P 500 lost 3 to 1449.

One of the big movers today should be Morgan Stanley Dean Witter (MWD), which reported earnings this morning. It posted third-quarter earnings of $1.09 a share, missing the 14-analyst estimate of $1.17, but up from year-ago earnings of 83 cents a share. The news was a surprise, since fellow brokerage firms Goldman Sachs (GS) and Lehman Brothers (LEH) posted strong earnings results earlier this week. Morgan Stanley was down 7.7% in early action.

Meanwhile, the stream of economic data is a thin one. Initial jobless claims came in at 308,000 for the week ending Sept. 16, less than the forecast of 318,000 and down from a revised 326,000 in the prior week. The Philadelphia Fed Index is slated for release at 10 a.m. EDT. The Philly Fed Index is considered a good gauge of what to expect when the important Purchasing Managers' Index (definition | chart | source ) is reported early next month.

Though most indicators have lately been backing up the notion that inflation is in check, investors appear unwilling to let down their guard as long as oil prices continue to bump up against decade highs on supply concerns. And the euro, which has been steadily touching new lows, is not exactly inspiring confidence in multinational companies. TheStreet.com has been covering the oil crisis carefully. Our most recent story appeared yesterday.

TheStreet.com has also been tracking companies that have issued warnings about upcoming earnings, most of which have been affected by the weak euro or high oil prices -- or both. A chart of these warnings is published separately. Volatility has been the name of the game in the past few trading sessions, as the market reacts quickly -- and not always rationally -- to the slew of earnings previews, both good and bad.

"Basically, the market is still struggling under the three 'E's': energy, earnings and the falling euro. They are contributing to a very high level in the fear index," said Peter Cardillo, chief strategist at Westfalia Investments.

Yesterday's trading action was a case in point. For a while there, things were looking pretty ugly, with the Dow Jones Industrial Average off more than 200 at its low point.

If you weren't around to witness the dive and subsequent snapback in the Dow, you might have been under the impression that the 100-point loss at the close was a bad thing. However, some market watchers were undoubtedly breathing a sigh of relief as that loss was chopped in half.

The Nasdaq Composite Index , unlike the U.S. women's gymnastic team in Sydney, executed a graceful comeback, reversing a morning profit-taking slide to end the day up 31 points.

"From a technical standpoint, the market needs to bounce. The Dow has broken down and is approaching support levels -- we might get a relief rally," Cardillo said. "The Nasdaq, which did reach support levels earlier in the week, has bounced off them," he said, referring to the Comp's triple-digit-twist on Tuesday.

Cardillo expressed optimism about the third-quarter earnings outlook. "The elimination process of the above [three E's] will begin with corporate earnings. From a contrarian viewpoint, when negative sentiment increases to its heights, a turnaround usually sets in. The more negative news, the greater the chance that an elimination process will take hold, and we could see a reversal process set in. Until then, it's going to be choppy," he said.

For now, at least, it doesn't look like a clear direction will emerge any time soon. Even as the tech-heavy Nasdaq screamed higher on Tuesday, traders were talking of a dead-cat bounce and wondering whether the move had any conviction. By yesterday morning, the answer would have been a resounding "no." But at the close, that answer had turned into a resounding "maybe."

On the earnings horizon, cruise operator Carnival (CCL) docked its third-quarter earnings today. It said net income was lower in the third quarter than a year ago, but it had earnings per share of 67 cents compared to the analyst expectation of 64 cents. The stock has been scraping the bottom of a trading range for most of the year and is down more than 50% year to date. Carnival was 3.1% higher in early action today.

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Bonds/Economy

Lately, the benchmark 10-year Treasury was up 3/32 to 98 30/32, yielding 5.892%.

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International

European markets were soaking in red at midday. In London, the FTSE was off 77.5 to 6202.4. The French CAC-40 was down 134.54 to 6270.89 and the German DAX was sliding 124.46 to 6640.77.

Asian markets ended lower.

The Nikkei 225 index shed 147.26 to close at 16,311.1.

The euro managed to hit another low against the dollar, hitting 0.8474 during Asian trading. It was lately trading at $0.8527. The greenback also slid against the yen recently to fetch 106.56.

Hong Kong's Hang Seng index slid 501.17, or 3.2%, to close at 15,164.45, largely due to shares of Pacific Century Cyberworks(PCW) getting pummeled. PCW fell HK$1.60, or a whopping 14.9%, to 9.15 ($1.17) after shares were suspended midday Wednesday at HK$10.75. Korea's Kospi index shed 10.09, or 1.7%, to close at 595.99.

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