Strong economic data and their consequences for the

Federal Reserve

have been key factors in the stock market's recent selloff. But a weak

retail sales report this morning has brightened the outlook early on and forced shorts to scramble.

In recent trading, the

Nasdaq Composite Index

was up 69.68, or 2.06%, at 3454.41, though it had traded as high as 3453.59. Internet stocks were rebounding as well.

TheStreet.com Internet Sector

index was up 24.11, or 2.99%, at 831.78. But there was some doubt as to whether the recovery would be more than a shakeout of shorts or provide a selling opportunity for those who didn't get out over the past couple of days.

In his premarket commentary, Robert Dickey, director of technical research at

Dain Rauscher Wessels

wrote that the markets were very close to critical support levels that must hold -- or another sharper move to the downside would follow. For the Nasdaq, he wrote that the number to hold is 3300, which was a prior reaction low. He wrote that a test but not a break of that level "would help the market enormously in its creation of a bottom." He added that the next three to five trading days will tell, "but the odds of holding or breaking down are about even at this point."

Among stocks in the news,

MP3.com

(MPPP)

was down 1/2, or 4.2%, at 11 3/8 after the company said it would not allow users to access major label songs contained in its database, while it works toward settling a copyright infringement suit brought on by major record companies. Our own

Tish Williams

was Jane on the

spot covering MP3 CEO Michael Robertson's speech at the

Chase H&Q Technology Conference

yesterday.

Audible

(ADBL)

was up 3/32, or 2%, at 4 25/32. The company said that it had aligned with

Random House

to establish

Random House Audible

, which it said was the first imprint to produce spoken word content specifically suited for digital distribution. Titles published by the imprint will be distributed exclusively on the Internet by Audible.

24/7 Media

(TFSM)

was flat at 18 1/4. The Internet advertising firm reported a loss of 44 cents a share for its first quarter compared with the

First Call/Thomson Financial

estimate of a 53-cent loss.

Online brokerages were mostly weaker after

Charles Schwab

(SCH)

came out with its April numbers that showed a decline in trading compared with trading in March. In addition, May's activity is lower than in April, according to a statement by CEO David Pottruck, who attributed the decline to seasonality.

April's daily average revenue trades fell 9% to 317,300 from 346,900, but were still higher than last April's then record of 207,700 trades a day. Customer assets held by the brokerage declined on the month as well to $774.9 billion from $823.2 billion in March, but again were up from the $564.3 billion the company held last April. Schwab attributed the monthly decline in assets in part to selling by customers to pay taxes. Schwab's monthly market report is often used as a barometer for the entire online trading industry. Schwab was off 1 3/8, or 3.4%, at 38 15/16.

Caroline Humer contributed to this report.