Cyclicals Head Higher as Profits Are Seized in Tech

After taking a well-deserved nap, cyclicals awakened again today, while technology and Internet stocks bid a quick

adieu

to an early session pop and tumbled.

The

Dow Jones Industrial Average

was up 64.72, or 0.6%, to 10,783.31. Earlier, the Dow traded as high as 10,845.45.

J.P. Morgan

(JPM) - Get Report

,

Alcoa

(AA) - Get Report

,

United Technologies

and

Chevron

(CHV)

were the biggest boosts to the Dow. Also notable on the upside in the Dow was

Caterpillar

(CAT) - Get Report

.

The

Morgan Stanley Cyclical Index

was up 0.9%.

The leaders in the Dow were mirroring what's going on overall in the market today, as tech and cyberspace stocks have declined while energy, basic materials and bank stocks have rallied.

The

Nasdaq Composite Index

was slumping 38, or 1.4%, to 2614.

The

S&P 500

was down about half a point to 1359. The energy, basic materials and financial industry groups were the best performers in the S&P 500, while the weakest group was technology.

Yesterday, both the Comp and the S&P 500 closed at record highs.

The

Russell 2000

was off a fraction to 435.

Tech bellwethers were softer, with

Microsoft

(MSFT) - Get Report

,

Intel

(INTC) - Get Report

,

Cisco

(CSCO) - Get Report

and

Dell

(DELL) - Get Report

all lower.

Tech sector gauges were weaker. The

Philadelphia Stock Exchange Semiconductor Index

was down 1.9%. The

Nasdaq 100

was off 1.9%, while the

Morgan Stanley High-Tech 35

surrendered 1.4%.

TheStreet.com Internet Sector

index was tumbling 19, or 2.7%, to 695 in the wake of its recent rally.

Internet giant

America Online

(AOL)

-- which has had a nice run-up lately -- has fallen ahead of its earnings report expected after the close. AOL was also most active on the

New York Stock Exchange

, with 24.3 million shares changing hands.

Much of the market's pop early on was due to Wall Street-pleasing earnings out of

eBay

(EBAY) - Get Report

and

AT&T

(T) - Get Report

. eBay was up 4.2%. AT&T was up slightly.

Philip Roth, chief technical analyst at

Morgan Stanley Dean Witter

, said with the tech sector's sharp rebound after getting whacked recently, it is "not in a position to sustain an advance."

He said the market is going to have to look away from tech for short-term leadership, and he's looking at cyclicals, energy and capital goods stocks to provide that leadership.

Basic materials, bank and energy stocks were enjoying nice gains today.

The

Chicago Board Options Exchange Oil Index

was up 2.4%, while the

Philadelphia Stock Exchange Oil Service Index

gained 1.8%.

The

Philadelphia Stock Exchange/KBW Bank Index

was up 2.1%. The

Philadelphia Stock Exchange Gold and Silver Index

was surging 4.6%.

Roth said while there's high risk in speculative areas of the market, the risk is "very small" in the basic materials and energy areas.

Louis Todd, head of equities trading at

J.C. Bradford

, cited profit-taking for the decline in tech and Internet stocks. He noted that after the dramatic rally in the Nasdaq Comp of late, it was due to take a breather.

On the NYSE, advancers were beating decliners 1,645 to 1,196 on 548 million shares. On the

Nasdaq Stock Market

, losers were beating winners 1,880 to 1,809 on 678 million shares. On the NYSE, 72 issues had set new 52-week highs while 27 had touched new lows. On the Nasdaq, 55 issues had set new highs while new lows totaled 29.

Bid.com

(BIDS)

was the Nasdaq's most active issue, with 23.5 million shares changing hands. It was up 3, or 18.3%, to 19 1/2.

As for the Treasury market, the 30-year Treasury bond lately was up 15/32 to 95 23/32, yielding 5.55%. (For more on the fixed-income market, see today's early

Bond Focus.)

Meanwhile, among other equity indices, the

Dow Jones Utility Average

was up 1%, the

American Stock Exchange Composite Index

was up 0.2% and the

Dow Jones Transportation Average

was off 0.2%.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

Dow component AT&T was inching up 1/2 to 53 7/16 after reporting first-quarter operating earnings of 61 cents a postsplit share, including the impact of its March 9

TCI

acquisition, beating the 18-analyst forecast of 57 cents and moving ahead of the year-ago 45 cents.

Meanwhile,

Comcast

(CMCSK)

was up 2 1/8 to 66 3/8 after

The Wall Street Journal

reported that the company is in preliminary discussions to align itself with either Microsoft or AOL to counter Telephone's $54 billion cash-and-stock bid for

MediaOne

(UMG)

. Comcast previously offered $48 billion in stock. MediaOne was up 1 9/16 to 80 3/8. Microsoft was down 3 5/16 to 84 3/4. Ahead of today's postclose earnings, AOL was down 5 13/16 to 156.

TheStreet.com

previewed the earnings report from Ma Net in a

piece this morning.

In other news:

Airborne Freight

(ABF)

was down 4 15/16, or 13.8%, to 30 3/4 after

Morgan Stanley Dean Witter

cut it to outperform from strong buy. Last night, the company missed first-quarter earnings estimates by 6 cents with a profit of 51 cents a share.

Apple

(AAPL) - Get Report

was up 3 1/8, or 7.7%, to 44 after

Goldman Sachs

upgraded the stock to its recommended list from market perform.

Dollar General

(DG) - Get Report

was up 3 1/8, or 9.6%, to 35 5/8 after setting a 5-for-4 stock split.

Park Place Entertainment

(PPE)

was up 1 3/4, or 19.2%, to 10 7/8 after agreeing to buy

Caesars World

and other gaming assets from

Starwood

(HOT)

for $3 billion in cash. The sale excludes the

Desert Inn

golf resort and casino in Las Vegas. Starwood was down 7/16 to 34 9/16.

Razorfish

(RAZF)

, a digital communications company, was soaring up 16 7/16, or 102.7%, to 32 7/16 after

Credit Suisse First Boston

priced its 3 million-share IPO at $16 a share.

Toys R Us

(TOY)

was up 1 11/16, or 8%, to 23 9/16 after announcing plans to establish a separate Internet sales unit in a strategic partnership with

Benchmark Capital

, a Silicon Valley venture-capital firm. The company also said it acquired a 500,000-square-foot, automated distribution center in Memphis, Tenn.

Earnings/revenue movers

eBay was up 8 11/16 to 217 7/8 after late yesterday posting first-quarter earnings of 5 cents a share, 3 cents ahead of the 10-analyst forecast and above the year-ago penny. Meanwhile, online auction house

Bid.com

(BIDS)

-- rallying lately on word of an online audio auction planned for tonight -- was up 2 5/8, or 16%, to 19 1/16.

Macrovision

(MVSN)

was up 6 3/16, or 15.4%, to 46 7/16 after last night topping first-quarter earnings estimates by 3 cents with a profit of 20 cents a share.