Market May Head South at Open

The market can't decide what to make of yesterday's action this morning, and futures have turned tail into the red after being moderately up earlier this morning. But it's hard to say what futures mean these days. Futures were strongly in the green before the open yesterday, and major indices plunged into the red following the bell.

At 9:12 a.m. EDT, the S&P 500 futures were down 1.6 points, just more than 3 points below fair value and not a clear indication for the early going. The Nasdaq 100 futures were off 25 points, after being up 34 points an hour ago, which could indicate some renewed selling pressure in large-cap tech stocks at the open.

Despite a pretty substantial bounce in the final hours late yesterday afternoon off serious morning weakness, many traders say nothing has really changed. The Nasdaq Composite Index fell to new intraday lows yesterday, taken out by major tech bellwethers like Cisco(CSCO Quote), and was later followed by big names on the Dow Jones Industrial Average. But the market remains in a trading range between mid-April lows and early May highs.

"We'll probably continue in a trading range until we get an indication on interest rates. People are starting to get nervous now about a soft landing. Economic news is going to be closely watched here," said John Manahan, head trader at Brown Brothers Harriman.

Wall Streeters continue to worry that Fed Chairman Alan Greenspan could react to fears of inflation by raising interest rates again and sharply slowing the economy. Any severe slowdown would take a big bite out of earnings at a time when valuations are still considered to be too high.

Until the market gets more signs from economic data and from the Fed, volume should remain weak and action volatile. On Thursday, Greenspan will address the National Association of Urban Bankers, and while he is not scheduled to speak about the Fed's interest rate plans, he may provide clues. That same day, revised first-quarter gross domestic product will be released, but it's a rear-window number and may not affect the Fed's next decision. Durable goods orders, a secondary report, comes out on Friday.

Investors will continue to watch General Motors(GM Quote) today, as the Justice Department charged an ex-auto executive with giving confidential company documents to Volkswagen(VLKA ADR Quote), which hired him away from GM several years ago. Yesterday, GM was blamed for much of the early downside on the New York Stock Exchange.

There are few earnings reports expected for today, and the list includesFluor(FLR Quote) and Novell(NOVL Quote).

The Treasury market was slipping after being unchanged earlier this morning, and the 10-year note was down 7/32 to 100 4/32 and yielding 6.481%.

The large European bourses were falling off earlier strength near midsession today. Frankfurt's Xetra Dax had turned to the red and was off 16.05 to 6896.91, while the Paris CAC was still just barely in the green, up 6.33 to 6100.50. Across the Channel, London's FTSE was still up 11.4 to 6046.9.

The euro was trading up at $0.9114.

Meanwhile, a recently proposed merger between Frankfurt's and London's exchanges is still up in the air.

The major Asian markets were mixed overnight, following a confusing day in U.S. markets Monday.

In Hong Kong, the Hang Seng closed up 116.45 to 14,257.18.

In Tokyo, stocks fell 67.28 to 16,318.73.

The dollar saw early gains against the yen more than erased, on concerns that further falls in stock prices in the U.S. could lead to more dollar selling in the weeks to come. The dollar closed at 106.66 yen in Tokyo trading, and was recently sitting at 106.76 yen.