Early Signals Mixed for Stocks

Observers will be looking to see if the market's beaten-down sectors can extend yesterday afternoon's strength.
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It looks like stocks are going to make a flattish entrance.

At 9:05 a.m. EST, the

S&P 500

futures were up 7, fractionally above fair value and not indicating much of a clear trend for the day ahead. The

Nasdaq 100

futures were up 23.45 to 3990.95.

"There's a generally bearish tone, which is probably a good thing," said Rob Cohen, co-head of listed trading at

Credit Suisse First Boston

. "That could lead us to further upside, up the proverbial wall of worry. The negative is that there is a huge supply of both primary and secondary issuance coming out, aside from insider selling. That's the supply issue weighing on the market right now."

If you're wondering how much yesterday afternoon's strength in a number of large-cap blue-chips can be taken as a sign of a bottom, keep your eyes on stocks in the financial, basic materials and retail sectors. Traders will need to see some sustained broadening into some of the market's most beaten-down groups to get confident that a true reversal of the downtrends in the S&P 500 and

Dow Jones Industrial Average

is imminent.

But it will be difficult to get a real rotation without some money leaving the technology sector, and the state of tech looks even harder to diagnose than the broader market. Before last Friday's big selloff, the Nasdaq's leadership wasn't showing the kind of divergences that technicians look for when trying to time a market top. "We usually look for some indication that indexes are making new highs but that momentum and volume indicators are not," said Dick Dickson, technical analyst at

Scott & Stringfellow

in Richmond, Va. "But they were. They were confirming it."

Leading today's corporate headlines is

Alcatel's

(ALA)

$7.1 billion

acquisition of

Newbridge Networks

(NN)

.

ADC Telecommunications

(ADCT) - Get Report

, meanwhile, has set plans to buy

PairGain Technologies

(PAIR)

for $1.6 billion in stock.

The event with the biggest market-wide impact will be Day Two of

Fed

Chairman

Alan Greenspan's

Humphrey-Hawkins

testimony, this time before the

Senate Banking Committee

. Greenspan will merely repeat the speech he gave last week before the

House Banking Committee

, and you'd have to think that there's little the market doesn't know about the G-man's views on monetary policy and the economy. But the Q&A always promises a bit of minor fireworks.

The bond market was giving back some of yesterday's gains, with the 10-year note down 8/32 to 100 24/32 and yielding 6.397%. The 30-year Treasury, meanwhile, was off 12/32 to 101 28/32, putting its yield at 6.112%.

The large European indices were rallying hard in early afternoon trading, paced by London's

FTSE

, which was up 126.2, or 2.1%, to 6140.9. Frankfurt's

Xetra Dax

was up 164.34, or 2.2%, to 7772.28, while the Paris

CAC

was 80.91 higher, or 1.4%, to 6044.22.

The euro was trading up at $1.0053.

Asian markets moved higher overnight.

In Tokyo, retail investors hunting out bargains helped stocks erase early losses, with the

Nikkei

closing up 128.97 to 19,519.55.

The dollar was little changed against the yen in Tokyo trading, hovering around 110.30 yen before picking up in London. The greenback was lately sitting at 111.03 yen.

Hong Kong investors managed to shake off concerns about U.S. interest rates and Sino-Taiwan tension to send the

Hang Seng

up 121.62, or 0.75%, to 16,376.79. The index was juiced by interest in the hot public offering from

tom.com

, the Web portal jointly owned by Hang Seng constituents

Hutchison Whampoa

(HUWHY)

and

Cheung Kong

. Local wires said the tom.com offering, which starts trading March 1, looks to be more than 1,000 times oversubscribed.

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