Market Trends Higher in Tentative Early Trading

The market is attempting another bounce at the open this morning after the major indices tanked yesterday, and it seems to be finding some footing in the early going. Futures were solidly in the green this morning, but investor beware: Futures, and stocks, have tried to bounce for the last three days in a row with little success.

In the opening moments, the battered Nasdaq Composite Index moved to the plus side after a lower start, gaining 12 to 3177, and the Dow Jones Industrial Average was up about 38 to 10,460. Most other major indices were stronger as well.

Each successive down day amplifies Wall Street's anxiety over where the market will find itself a firm bottom. Some say yesterday was it, as the Nasdaq crashed through its mid-April lows to its lowest close for the year, at 3164. The Dow and the S&P 500, meanwhile, stumbled down toward mid-April lows but didn't hit those levels, ending at 10,422.27 and 1373.86 respectively.

But trading volume is still nonexistent. In fact, Nasdaq volume slipped to a low not seen since January 1997 yesterday. A bottom is usually marked by accelerating fear, and accelerating volume to the downside.

"Yesterday's action was extremely disappointing. The market tried to hold together, but we had a very weak close that did some pretty big technical damage to the Nasdaq," said Todd Clark, head of listed trading at W.R. Hambrecht.

"So I wouldn't look to see a bounce hold today. I'm looking for 2870 on the Nasdaq Composite, whether we get there today or not," he added.

"If the market comes down pretty hard today, we could be in oversold territory, which could give us a trading rally, but one of the elements that has to be in place is a lot more puts," Clark explained.

While uncertainty is still high over how much the economy has slowed and how much the Federal Reserve plans to raise interest rates, Clark said much of the recent down action has been an attempt to price expectations of a more aggressive Fed into the market.

"The nice thing about the market is that it tends to discount future events pretty rapidly. The last week we've been trying to do that," he said.

On Thursday, Fed chairman Alan 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.

Meanwhile, the market may take some direction today from news that United Airlines' parent company, UAL(UAL Quote), agreed to buy most of US Airways(U Quote), the sixth largest carrier in the U.S., for $4.3 billion dollars. Some are saying that this price, which constitutes a premium of 130%, may be intended to keep other interested buyers out. So far this morning, US Airways is up substantially in heavy trading.

No economic news is scheduled for today but there are a few earnings reports. The market will hear from Costco Wholesale(COST Quote), Harcourt General(H Quote), Medtronic(MDT Quote) and Pall(PLL Quote).

The Treasury market was losing ground, with the 10-year note off 8/32 at 100 8/32 and yielding 6.463%.

The large European bourses were taking their cues from futures in the U.S. and tentatively creeping off of earlier lows, with London leading and back in the green. It's too soon to tell if the rallying spirit will hold, however.

London's FTSE was 24.0 higher to 6110.8 after breaking below the 6000 level for a few minutes earlier in the morning.

Across the Channel, Frankfurt's Xetra Dax was off 63.79 to 6863.90, while the Paris CAC was down 68.51 to 6080.05.

The euro was trading up at $0.9095.

Meanwhile, the board of Frankfurt's stock exchange approved a merger with the London exchange to create a pan-European bourse called iX. The London Stock Exchange must still approve.

The major Asian markets tanked overnight, with Hong Kong's blue-chip Hang Seng index hitting six-month lows and Tokyo's benchmark Nikkei index falling to a 12-month low after six consecutive days of losses.

In Hong Kong, the Hang Seng index closed down 269.95 points, or 1.9%, to 13,987.23.

In Tokyo, the Nikkei index was off 274.29 points, or 1.7%, to 16,044.44.

In Tokyo currency trading, the dollar was little changed, closing at 106.63 yen.

In Taiwan, the TWSE index fell 170.60 points, or 2%, to 8500.41. Korea's Kospi index fared better, losing 4.81 points to 674.95.