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Stocks Showing Modest Weakness This Morning

Micron Technology is lower on Instinet after missing its earnings estimates last night.

It looks like stocks will give back some of yesterday's big gains in the early going, though the market's outlook has improved considerably in the past hour.

At 9:05 a.m. EST, the

S&P 500 futures

were up 2, well off their morning lows but still about 3 points below fair value. That indicates a somewhat weaker open for the broad big-cap market.

Things look mixed for technology stocks. The

Nasdaq 100

futures were lately up 7 points, but fears surrounding some earnings disappointments from last night could bring out some sellers.

"I think we're ready to take a little bit of a rest," said Jim Volk, co-director of institutional trading

D.A. Davidson

. "Of course, they always seem to come back later in the day after these oversolds. But the

Micron

(MU) - Get Report

number, the preannouncement by

Santa Cruz

(SCOC)

, the

Zebra

(ZBRA) - Get Report

warning -- a little bit of caution."

It remains to be seen whether there'll be any broad tech fallout from Micron Technology's

downside surprise last night. But that stock was coming off its lows in the premarket, lately trading at 125 3/4 on

Instinet

, down from a close of 130 1/2.

Meanwhile, software firm Santa Cruz Operation warned yesterday of a shortfall in second-quarter sales. And Zebra Technologies, maker of bar code label printers, said that its first-quarter sales would not meet estimates.

Still, even if stocks should open lower, Volk noted, "until the psychology really changes, the market is still in an upward trend."

That the market didn't sell off yesterday after the

Fed

raised interest rates isn't strange. As people have been repeating for weeks, a 25-basis-point hike was already priced in. But stocks' ability to rally as hard as they did was less expected, especially given the Fed's boilerplate statement, which gave no indication that the tightening cycle was nearing its end.

Rightly or wrongly, sentiment over interest rates seems to have shifted a bit. "I am hearing the consensus view swing around to May being the last of the rate hikes," said Charles Crane, chief market strategist at

TheStreet Recommends

Key Asset Management

in New York. "That may be wishful thinking, but (the thinking is) perhaps one more in May, especially given the political calendar."

Forget about whether such a view is justified. (The economic data suggest that consumer spending and economic growth are still too hot for

Alan Greenspan's

taste.) Recent action in the financial sector would suggest that view has its adherents. The

Philadelphia Stock Exchange/KBW Bank Index

is up nearly 20% since March 10, while the

American Stock Exchange Broker/Dealer Index

is still buzzing around its all-time high. And the bond market's two-month rally can only bolster the interest-rate optimists, with the 10-year note shaving off more than 65 basis points in yield since mid-January.

The bond market was edging higher, with the 10-year note up 6/32 to 102 26/32 and yielding 6.116%.

The large European indices were mixed in afternoon trade. Frankfurt's

Xetra Dax

was up 51.02 to 7858.95, while the Paris

CAC

was up 13.17 to 6334.04. London's

FTSE

was down 19.1 to 6598.8.

The euro was trading down at $0.9590.

Asian markets moved higher in generally quiet trading overnight.

In Tokyo, the

Nikkei

rose 131.23 points to 19,733.59.

With Japanese exporters looking to sell the dollar at the 107-yen level, the greenback remained listless around 106.65 yen throughout Tokyo trading. It was lately sitting up at 106.80 yen.

Yesterday's Fed decision didn't do anything to faze investors in Hong Kong, where interest rates track those in the U.S. The

Hang Seng

boomed 347.06 higher, or 2.0%, to 17,547.04.

Taiwan's

TWSE

index managed to edge higher without the help of buying from the government's market stabilization fund. It closed up 64.91 at 9069.39.

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