SAN FRANCISCO -- Like a butterfly caught in the pull of a vacuum cleaner, the stock market flapped its wings mightily today but ultimately couldn't help but lose its initial forward progress. A giant sucking sound from the bond market and bellwether tech names pulled major averages well off session highs, although they ended mixed.

Bonds faltered in the face of a stronger-than-expected

Atlanta Fed

survey and lackluster demand for the final leg of the

Treasury Department's

three-day auction. A power outage which ultimately caused the

Chicago Board of Trade

to close at 2 p.m. EDT exacerbated the selling, as traders feared being unable to get out of positions before tomorrow's

PPI

figures are reported. (For more, see the CBOT's

Web site.)

Power problems in the city also affected the

Chicago Board Options Exchange

and the

Chicago Mercantile Exchange

, although not nearly to the same degree.

"We're fully powered unless you want to go down the escalator and stuff," said Brad Benshop, vice president of CME equities at

J.P. Morgan Futures

. "We're open but a lot of people have just stopped trading." Many options trading firms routed business through New York desks or specialists on the

American Stock Exchange

and

Pacific Exchange

floors.

All of the Chicago exchanges now say they'll be up and ready for trading tomorrow morning, although the CBOT will remain shut overnight.

Equity traders said the CBOT shutdown didn't really hurt in what was already a slow-moving session. But it certainly didn't help, especially as bonds weakened further from already declining levels.

The price of the 30-year Treasury bond fell 22/32 to 86 9/32, its yield rising to 6.28%. (For more on the fixed-income market, see today's late

Bond Focus.)

Technology stocks weakened from

yesterday's big advance after

Merrill Lynch's

Steve Fortuna initiated coverage on

Dell

(DELL) - Get Report

,

Gateway

(GTW)

and

Micron Electronics

(MUEI)

with neutral recommendations. Fortuna described the PC business as "an industry under siege" and the stocks reacted accordingly. Dell fell 4.6% and Micron Electronics lost 5%, although Gateway dipped just 0.9%.

The

Nasdaq Composite Index

closed down 15.49, or 0.6%, to 2549.49 after trading as high as 2586.10 early on. In addition to Dell, the Comp was hampered by

Microsoft

(MSFT) - Get Report

and

Oracle

(ORCL) - Get Report

while other traditional tech bellwethers could muster no forward progress. The

Nasdaq 100

fell 1.2%.

The Comp avoided a wider loss thanks to strength in names such as

Amgen

(AMGN) - Get Report

and

Nextel

(NXTL)

. The latter leapt 10.8% after striking a deal to acquire the wireless airspace from

NextWave Personal Communications

, which filed for bankruptcy in June 1998.

The Comp also got a boost from renewed gains in Internet favorites.

TheStreet.com Internet Sector

index gained 4.16, or 0.8%, to 506.52.

'Seasonality is not conducive to people coming in and buying stocks and believing heartfelt we've seen the worst,' said Daiwa's Ned Collins. 'That doesn't mean you can't rally from here, but my own gut feeling is we're limited on the upside.'

The Merrill-inspired selling spilled over into other PC makers, such as

IBM

(IBM) - Get Report

, down 1.8%, and

Hewlett-Packard

(HWP)

, which lost 5.8%. H-P was further hampered by an unfavorable ruling in a legal battle vs.

Xerox

(XRX) - Get Report

over color laser chips. Nonetheless, Xerox fell 4.6%.

Elsehwere in

New York Stock Exchange

trading,

Motorola

(MOT)

dipped 5.4% and

Micron Technology

(MU) - Get Report

-- which owns most of Micron Electronics -- fell 7.9%. The

Morgan Stanley High-Tech 35

shed 1.6%.

Hampered by its tech components, the

Dow Jones Industrial Average

retreated from its morning best of 10,900.83. However, the proxy retained enough of the early impetus to close with a modest gain, up 1.59 to 10,789.39.

The Dow got a boost from

American Express

(AXP) - Get Report

,

United Technologies

and

Caterpillar

(CAT) - Get Report

. UTX gained 5% after announcing restructuring at its units while Caterpillar rose 3.3% after being upgraded by

Goldman Sachs

.

The

S&P 500

tracked the Dow but ultimately succumbed to its heavier tech influence, falling 3.77, or 0.3%, to 1298.16 after trading as high as 1313.59.

The S&P got a lift from both drugmakers and transports, which each had their best day in recent memory.

Warner-Lambert

(WLA)

led the way among the former, rising 5.5% to help the

American Stock Exchange Pharmaceutical Index

rise 2.3%. The latter got a boost from big carriers such as

AMR

(AMR)

, up 3.5%. The

Dow Jones Transportation Average

closed up 26.93, or 0.9%, to 3157.46 and the

Amex Airline Index

gained 2.1%.

The

Russell 2000

rose 0.63, or 0.2%, to 428.82.

Lack of Conviction, Peculiar Flows

"I just thought we were in such an oversold situation, it was not any great surprise to see the thing rally," said Ned Collins, executive vice president of U.S. stocks at

Daiwa Securities America

, of both yesterday's advance and this morning's rise. "But it seems to me seasonality is not conducive to people coming in and buying stocks and believing heartfelt we've seen the worst. That doesn't mean you can't rally from here, but my own gut feeling is we're limited on the upside."

Even at the markets heights today, Collins observed the advance/decline and volume indicators were not supportive of a sustainable advance.

In NYSE trading, 745.6 million shares were exchanged while declining stocks led advancers 1,528 to 1,481. In

Nasdaq Stock Market

action 952.5 million shares traded while gainers led 1,982 to 1,843. New 52-week lows bested new highs 155 to 53 on the Big Board and by 78 to 58 in over-the-counter trading.

"There's a lack of conviction and interest," the trader continued. "It's August. A lot of our clients in Japan and here are on vacation. The money flows are peculiar -- they don't seem to be quite as positive as in the past."

Asked to elaborate, he said, "I can't get a handle on money flows right now." Without hard evidence, Collins suspects inflows into outperforming funds may be coming from redemptions out of underperformers rather than from new money, which has been a major underpinning of the bull market.

Among other indices, the

Dow Jones Utility Average

slid 4.64, or 1.5%, to 312.60; and the

American Stock Exchange Composite Index

gained 3.28, or 0.4%, to 780.65.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

climbed 5.92 to 6914.98 and the

Mexican Stock Exchange IPC Index

gained 36.64, or 0.7%, to 5217.52.

Thursday's Company Report

By Tara Murphy and Eileen Kinsella
Staff Reporters

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Investors took

Clorox

(CLX) - Get Report

to the cleaners, driving the stock down 16 13/16, or 16.3%, to 86 7/16. The company posted fourth-quarter earnings of 96 cents a share before charges, in line with the 12-analyst estimate and up from the year-ago 91 cents. But those numbers didn't pass the analysts' white glove test.

Salomon Smith Barney

wiped Clorox off its approved list and cut the stock to buy from outperform.

PaineWebber

cut its rating to neutral from attractive and Merrill Lynch cut its profit estimate for the year ending June 30 to $3.51 a share from $3.75.

Mergers, acquisitions and joint ventures

Aegon

(AEG) - Get Report

added 1 3/8 to 83 5/8 on news that the Dutch insurer is acquiring the U.K. life insurance activities of

Guardian Royal Exchange

.

GenCorp

(GY)

rose 9/16 to 22 1/16 after it said that was at the starting block with another defense company, discussing a possible joint venture that would involve the propulsion operations of its Aerojet segment. GenCorp told

Reuters

that both companies would have a near-equal stake in the newly formed entity.

General Mills

(GIS) - Get Report

was off 5/16 to 82 3/16 after it announced plans but buy family-owned snack maker

Gardetto Bakery

. The acquisition would put

Nature Valley Granola Bars

,

Fruit Roll-Ups

and

Golden Graham Treats

under the General Mills label.

Veronis Suhler & Associates

is forging a deal to acquire

HCIA

(HCIA)

The health-care information systems developer traded 1 3/16, or 13.4%, to 10 on the news.

Chatter is again swirling on Wall Street that

Merrill Lynch

(MER)

, the nation's largest brokerage firm, is open to a merger deal either with

Chase

(CMB)

or another financial-services company, the Heard on the Street column in

The Wall Street Journal

says. The brokerage giant has been rumored to be in discussions with

American International Group

(AIG) - Get Report

, the insurance giant, the column says. Merrill gained 4 3/8 to 71 3/8, with Chase off 1 1/4 to 75 11/16.

Bankrupt wireless carrier

NextWave Telecom

is skeptical when it comes to a possible bid from

Nextel Communications

(NXTL)

for its wireless licenses. NextWave said

Federal Communications Commission

rules would not permit Nextel, an established carrier, to purchase the license. Shares of Nextel popped up 5 3/16 to 53 1/8.

Novell

(NOVL)

added 3/16 to 24 1/8 and

America Online

(AOL)

rose 3/8 to 92 3/4 after the two said they are hooking up to integrate the AOL Instant Messenger service with Novell's directory software.

Earnings/revenue reports and previews

Charles Schwab

(SCH)

jumped up 2 3/4 to 41 after the largest online and discount broker said July trading was up 19% from June, still below its high in April. The broker boasted July trades averaging 147,700 a day, up from the year-ago 102,600. Charles Schwab reported in Reuters that U.S. stocks jumped 10% last April when it processed a record 207,000 trades.

Coeur d'Alene Mines

(CDE) - Get Report

slipped 3/16 to 4 3/8 after reporting a second-quarter loss of 44 cents a share, 9 cents wider than the three-analyst expectation and wider than the year-ago loss of 36 cents.

Elan

(ELN)

, the Irish drug company with earnings whose accountant must be

Samuel Beckett

, was up 2 1/4, or 7.7%, to 31 1/4 on rumors that the

Securities and Exchange Commission

has sent a letter to the company saying it has a cleanish bill of health on its accounting issues. The rumor is the company will only have a 1-cent to 2-cent-per-share restatement of its earnings. This would be viewed positively, because the Street has been worried that the accounting problems were worse. Company officials in Ireland and New York weren't available immediately to comment.

Engle Homes

(ENGL)

added 5/16 to 10 5/8 after it reported third-quarter earnings of 71 cents per share, ahead of the three-analyst estimate of 60 cents per share and up from 44 cents a share a year ago.

e.Spire Communications

(ESPI)

lost 1/4 to 9 3/16 after posting a second-quarter loss of $1.40 a share, 2 cents narrower than the nine-analyst outlook but wider than the year-ago loss of 91 cents.

Flowers Industries

(FLO) - Get Report

added 3/8 to 16 1/2 after reporting second-quarter earnings of 10 cents a share, in line with the 10-analyst estimate but down from 19 cents a year ago.

Gap

(GPS) - Get Report

lost 5/8 to 37 7/8 after it reported second-quarter earnings of 22 cents a share, a penny ahead of the 18-analyst estimate and up from the year-ago 15 cents.

TheStreet.com

wrote about Gap in a story

yesterday.

Gottschalks

(GOT)

slipped 3/8 to 8 1/16, after it reported second-quarter earnings per share of a loss of 1 cent, better than the single analyst estimate of a 5-cent loss, and narrower than the year-ago loss of 13 cents.

Healtheon

(HLTH)

was up 3 7/8, or 12.9%, to 34 1/8 despite reporting a second-quarter loss of 25 cents a share, wider than the three-analyst estimate of a 22-cent loss but narrower than the year-ago loss of 47 cents. On Tuesday, the stock skidded sharply due to a lockup expiration.

New Plan Excel

(NXL)

rose 3/16 to 18 7/16 after reporting second-quarter earnings of 56 cents a share, in line with the nine-analyst estimate and up from 51 cents a year ago.

Home Depot

(HD) - Get Report

added 1 5/8 to 59 3/8 after saying it expects to report second-quarter earnings of 44 cents a share. The 22-analyst estimate currently calls for earnings of 39 cents. The company said it will post second-quarter results Tuesday.

Keebler Foods

(KBL)

slipped 1/8 to 28 7/8 after it reported second-quarter earnings before a charge of 27 cents a share, 3 cents ahead of the 10-analyst estimate and up from the year-ago 22 cents.

Kmart

(KM)

added 3/8 to 14 5/16 after it reported second-quarter income from continuing operations of 26 cents a share, a penny ahead of the 16-analyst estimate.

Macerich

(MAC) - Get Report

rose 1/4 to 23 13/16 after the company reported second-quarter earnings per share of 64 cents, a penny better than the 11-analyst estimate and up from a pro forma 59 cents a year ago.

ShopKo

(SKO)

lost 3 5/16or 9.6%, to 31 3/16 after it posted second-quarter operating earnings of 32 cents a share, a penny ahead of the three-analyst estimate and up from the year-ago 27 cents, which excludes a charge.

Thermo Instrument

(THI)

was unchanged at 13 5/8 after posting second-quarter earnings of 18 cents a share, 3 cents short of the single-analyst estimate and lower than the year-ago 20 cents.

Weider Nutrition

(WNI)

slipped 3/16 to 4 1/2 after it reported fourth-quarter pro forma earnings of 4 cents a share, lower than the two-analyst estimate. Year-ago EPS was 23 cents after a restatement.

Offerings and stock actions

Video chain

Blockbuster

(BBI) - Get Report

wasn't getting any awards from the Academy. The two-day old stock closed flat again at 15, albeit after an active session that saw it trade as high as 16 7/8.

FirstAmerica Auto's

(FAA:NYSE) plans for an IPO came to an abrupt stop after the size of the offering had earlier been cut.

Luminant Worldwide

(LUMT:Nasdaq), an Internet consulting firm, lowered the number of shares it plans to offer, to 9 million from 12.6 million, and dimmed the price range to $10 to $11 from an earlier $11 to $13, said lead underwriter

Deutsche Banc Alex. Brown

.

Despite the nervousness,

NetScout Systems

(NTCT:Nasdaq) fared well in its first trading day, climbing 2 3/4, or 25%, to 13 3/4 after being priced at $11 a share by Deutsche Banc Alex. Brown

Ralston Purina

(RAL)

was off 1/4 to 28 1/16 on news that its board gave its stamp of approval for an 8 million-share buyback of its common stock, permitting the company to buy periodically at existing market prices. The company has almost completed another 8 million-share buyback ,which gained approval in February. PaineWebber gave Ralston a boost, raising it from an attractive to buy.

U.S. Aggregates

, a maker of crushed stone, hammered down its offering to 5 million shares from 6.94 million, and chiseled the price to $15 a share from the original $17 to $19, according to lead underwriter Alex. Brown.

Ixnet

(EXNT)

ended up flat at 15, after it decided to be brave and go ahead with its 6.5 million-share IPO. The offering, led by Donaldson Lufkin & Jenrette, priced below its expected range of $16 to $18 a share.

Analyst actions

BankBoston

(BKB)

edged up 1/8 to 47 7/16, after Merrill Lynch raised its rating to near-term accumulate from neutral.

Caterpillar crawled up 1 3/4 to 61 after Goldman Sachs said it raised the company to the recommended list from market perform.

Corning

(GLW) - Get Report

fell 3 3/4, or 5.8%, to 61 3/8 after

J.P. Morgan

started coverage with a buy rating and set a 12-month price target.

Dow Jones

(DJ)

rose 3/8 to 51 3/16 after

Morgan Stanley Dean Witter

upgraded it to outperform from neutral.

First Health

(FHCC)

added 1/4 to 23 7/16 after Credit Suisse First Boston started coverage with a buy rating and set a price target of 27.

Metro-Goldwyn Mayer

(MGM) - Get Report

lost 1 1/2 to 17 1/8 even though J.P. Morgan raised its rating to buy from long-term buy.

Reynolds Metals

(RLM) - Get Report

added 1 7/8 to 66 3/8 even though Deutsche Banc Alex. Brown cut its rating to market underperform from market perform.

Splitrock

(SPLT)

rose 7/16 to 9 13/16 after Credit Suisse First Boston initiated coverage with a buy rating and set a price target of 18.

Sun Microsystems

(SUNW) - Get Report

lost 1 11/16 to 70 1/16 after Credit Suisse First Boston reiterated its buy rating on the stock.

Texas Instruments

(TXN) - Get Report

lost 1 to 145 1/4 after yesterday's run-up, even though Deutsche Banc Alex. Brown raised its price target to 185 from 161.

24/7 Media

(TFSM)

jumped 2 3/16, or 8.2%, to 29 after Merrill Lynch raised it to near-term buy from accumulate.

Miscellany

Shares of

Iridium

(IRID)

got slammed 1 11/16, or 28.4%, to close at a new low of 4 1/4. Last night the troubled phone-service provider said it had defaulted on more than $1.5 billion in loans, $750 million of which was provided by

Motorola

(MOT)

.

C.E. Unterberg Towbin

analyst William Kidd repeated a sell rating for the shares, saying an Iridium bankruptcy was probably near. Motorola dropped 5, or 5.4%, to 87 3/4.

TheStreet.com

examined Iridium's mounting woes in a

July 14 story.

MidAmerican EnergyHoldings

(MEC) - Get Report

dropped 2 3/4 to 30 3/8 after it announced plans to slash its British subsidiary

Northern Electric's

distribution staff by 500 jobs. British energy regulator

OFGEM

proposed a draft report recommending net revenue cuts for Northern Electric's distribution business of 18% to 23%. Merrill Lynch downgraded the stock from accumulate to neutral but reiterated a long-term buy rating.

Xerox

(XRX) - Get Report

lost 2 1/8 to 44 1/2 after Kansas U.S. District Court Judge J. Thomas Martin said its printers could contain microchips technologically enhanced by Hewlett-Packard. Shares of H-P plummeted 6 5/16, or 5.8%, to 103 1/16.

Unicom

(UCM)

, parent of Chicago-area utility

Commonwealth Edison

, slumped 1 to 38 5/16 after a power outage shut down trading at some Chicago exchanges (see above).

Staff reporters

Brian Louis and

Erin Arvedlund and senior writer

Justin Lahart contributed to this story.