Recovery Try Goes Nowhere as Indices Struggle for Traction

Institutional buyers who took the major indices off of their lows yesterday weren't playing the hero again, as stocks of all sectors drifted back into the red this morning. So what's keeping these insiders from taking their shopping lists back to the market for some bargain buying? With a lack of economic data to gauge the Fed's next move and positive earnings in the rearview mirror, those usually in the know are finding themselves out of the loop when it comes to safe investments.

Major Indices INDEX CHANGE % VALUE Dow 61.34 -0.6% 10,481.21 S&P 500 12.07 -0.9% 1388.65 Nasdaq 62.08 -1.9% 3302.13 Russell 2000 0.69 -0.2% 470.98 TSC Internet 17.14 -2.1% 801.24 NOTE CHANGE PRICE YIELD 10-Year Treasury 1/32 100 10/32 6.454%

"It's been a tough day," said Randy Billhardt, co-head of block trading at PaineWebber. "The volume has been very light and the moves have been dramatic. I liked yesterday's action when the buyers came in and brought the market back from its lows, but I think we'll see a whippy market ahead," said Billhardt, referring to the insiders who are standing on the sidelines, waiting for economic data to guide them toward an investment strategy.

Lately, the Nasdaq Composite Index was off 62, or 1.9%, to 3302. The Composite remains 33% in the red vs. its March 10 record high.

In Nasdaq trading, Microsoft (MSFT Quote), which is also a Dow component, was on the upside after making a pact with Viacom(VIA Quote) unit Simon & Schuster, Barnes & Noble (BKS Quote) and Random House to get well-known titles for its electronic book software.

In other tech news, the Philadelphia Stock Exchange Semiconductor Index was falling 3.7%, with losses from Applied Materials (AMAT Quote) and AMD (AMD Quote).

TheStreet.com Internet Sector index was declining 17, or 2.1%, to 801, with eBay(EBAY Quote) dragging almost 5.3%.

Today's selling woes aren't limited to tech. In fact, interest-rate uncertainty has trickled down even to sectors that seemed to have shrugged off last week's 50-basis-point hike. But some Wall Street insiders say relief could only be just a few days away.

"I think the market is looking for any economic data that suggest a softening in economic growth," said Brian Gilmartin, portfolio manager at Trinity Asset Management, while commenting on the possibility of a benign GDP report on Thursday.

And it might not be just a benign GDP that the market can anticipate. According to Gilmartin, upcoming data will show the first results of last year's rate increases, and how effective they were at cooling the economy. If the future data proves that last year's hikes were successful, it could send a signal to investors that Greenspan's mission was accomplished, thus eliminating the need for another 50 basis pointer in June. "Since the Fed monetary policy operates typically with a nine month lag, we should start seeing some type of impact."

Gilmartin added that Americans' growing interest in the U.S. economy could even accelerate the effects of a fed funds rate hike. "Macroeconomics is a much less mystical process that it was 20 or 30 years ago," he said. "Americans are much more educated and are quicker to react to changes in the monetary policy."

Lately, the Dow Jones Industrial Average was off 61, or 0.6%, to 10,481, with Intel (INTC Quote) as its biggest loser. General Motors (GM Quote) was still suffering after an oversubscribed tender offer for its Hughes Electronics (GMH Quote) unit left investors cashing out of the stock.

But it wasn't all bad news on the Big Board . The Dow Jones Transportation Average was bouncing 1.6%, fueled by strong gains from the airline sector.

The American Stock Exchange Airline Index was lifting off by 2.7%, with AMR (AMR Quote) up more than 6%.

Interest-rate-sensitive financials were still defying the sell off. The American Stock Exchange Broker/Dealer Index was advancing 0.8%, with Dow component J.P. Morgan(JPM Quote) up 1 1/16, or 0.8%, to 133 5/16.

The broad S&P 500 was sliding 12, or 0.9%, to 1389, while the small-cap Russell 2000 was losing less than 1 to 471.

Market Internals

Breadth was slightly positive on the NYSE but solidly negative on the Nasdaq, on moderately light volume.

New York Stock Exchange: 1,402 advancers, 1,309 decliners, 511 million shares. 22 new 52-week highs, 51 new lows.

Nasdaq Stock Market: 1,587 advancers, 2,154 decliners, 716 million shares. 16 new highs, 106 new lows.

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For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.