Low Volume and Bottom-Fishing Mark Session Before Big Rate News

Stocks did a

Boy George

today, tumbling for you throughout the morning and, like the pop singer's career, managing a bit of a comeback after the fall. Tech stocks led the recovery, notably big-cap bellwethers such as

America Online

(AOL)

,

Microsoft

(MSFT) - Get Report

and

Dell

(DELL) - Get Report

, which rose 4.9% on the eve of its first-quarter earnings report.

Still, investors were largely bereft of interest in trading ahead of tomorrow's

Federal Open Market Committee

meeting. Furthermore, the majority of stocks were losers in the least-attended session on the

New York Stock Exchange

since March 22.

In NYSE trading, just 670 million shares were traded while declining stocks led advancers 1,993 to 1,043. In

Nasdaq Stock Market

activity, 793.3 million shares were exchanged -- its lightest level since March 1 -- while losers led 2,182 to 1,809. New 52-week lows led new highs 69 to 25 in Big Board activity while new highs led 63 to 40 in over-the-counter trading.

"It was a fairly featureless day. We did virtually nothing in the morning," said Jim Benning, a trader

BT Brokerage

. "Things picked up a little in the afternoon, but people were basically on hold to see what the

Fed

does tomorrow."

Like most on Wall Street, Benning expects the Fed to adopt a tightening bias but does not expect a rate hike, saying "they'll let the market do it for them."

As for what turned the tech tide tech today, the trader said: "I think they just got beaten up, it was overdone. I'd be surprised to see any big rally tomorrow, but based on the late-day activity we should see a relatively positive day."

The

Nasdaq Composite Index

rambled back from a decline as low as 2494.51 to close up 33.98, or 1.3%, to 2561.84.

In addition to aforementioned, the Comp was aided by chip and equipment makers such as

Intel

(INTC) - Get Report

and

Applied Materials

(AMAT) - Get Report

. Notably, the latter rallied 4.1% despite a downgrade by

Salomon Smith Barney

, helping the

Philadelphia Stock Exchange Semiconductor Index

rise 2.2%. Meanwhile, the

Nasdaq 100

rose 2.4%.

Aided largely by the same, the

S&P 500

closed up 1.69, or 0.1%, to 1339.49 after trading as low as 1321.18 early on. The

Russell 2000

fell 1.78, or 0.4%, to 441.35, but off its low of 436.94.

Led by AOL and

CMGI

(CMGI)

, which each gained more than 8%,

TheStreet.com Internet Sector

index closed up 11.75, or 1.9%, to 641.28.

Meanwhile, the

Dow Jones Industrial Average

, once as low as 10,745.80, closed off 59.85, or 0.6%, to 10,853.47.

The Dow was hampered by

J.P. Morgan

(JPM) - Get Report

,

IBM

(IBM) - Get Report

and cyclicals such as

United Technologies

(UTX) - Get Report

and

Goodyear

(GT) - Get Report

. The

Morgan Stanley Cyclical Index

fell 1.2%.

Additionally,

General Motors

(GM) - Get Report

fell 3.4% after

Morgan Stanley Dean Witter

cut its recommendation to neutral from outperform.

Ford

(F) - Get Report

fell 5.3% after sustaining a similar downgrade.

Hewlett-Packard

(HWP)

was among the Dow's best performers, rising 4.4%. After the bell, H-P reported second-quarter earnings of 88 cents a share vs. the 21-analyst estimate of 80 cents.

The sluggishness of today's session was evinced by the inability of some big merger announcements to extend their influence beyond the participants.

Global Crossing

(GBLX)

fell 1.4% to 60 1/4 after trading as low as 57 1/2 and

U S West

(USW)

shed 6.4% after the telecom firms confirmed merger intentions.

Elsewhere,

Case

(CSE)

rose 8.2% after agreeing to a $55-a-share buyout offer from

New Holland NV

(NH) - Get Report

, which fell 6.8%.

Finally,

Gulfstream Aerospace

(GAC)

jumped 10.9% after accepting a $71.44-a-share offer from

General Dynamics

(GD) - Get Report

, which fell 8.7%.

Logical, Practical and Risky

"Rates are slowly ticking up which causes folks who buy large-cap growth stocks to do some asset allocating" into bonds, said Roy Blumberg, analyst and portfolio manager at

Sheer Asset Management

. "But there's a speculative element that doesn't play that game and believes anytime stocks dip, you buy them. When

asset allocators don't put enough pressure on the market, speculators come right back and of course they always come back to hot names."

Therefore, today's tech-led bounce was "very logical, practical and kind of risky," Blumberg said. "People trying get out of big-cap growth stocks are lightening up to stay unless rates

fall a lot."

The analyst, who joined the New York-based investment management firm last week, believes the recent rise in rates is nearing its culmination, suggesting 6.20% might be the "worst" near-term for the long bond's yield. "But I don't think we're going to see any data to make rates go down short-term," he said. "If we're near the high, they might stick."

As for tomorrow's FOMC gathering, Blumberg said a switch to a bias toward tightening is "already in the market" and bonds "might even rally" on such news. According to

Reuters

, 19 of the 30 U.S. primary dealers expect the Fed to adopt an asymmetric bias tomorrow but none expect a rate hike. Neither does Blumberg, but he believes there's an argument for just such an action.

Fed officials have "admitted they didn't need to ease as many times as they did," he notes. "I would argue the easing was a stock-market thing more than an economic thing and one

ease probably would have been enough."

Among other indices, the

Dow Jones Transportation Average

fell 15.22, or 0.4%, to 3651.12; the

Dow Jones Utility Average

added 3.27, or 1%, to 319.25; and the

American Stock Exchange Composite Index

slid 3.87, or 0.5%, to 784.94.

The price of the 30-year Treasury bond rose 4/32 to 91, its yield sliding to 5.90%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

slid 12.95, or 0.2%, to 6873.55 and the

Mexican Stock Exchange IPC Index

dipped 61.70, or 1%, to 5851.50.

Monday's Company Report

By Heather Moore
Staff Reporter

(

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.

)

As noted above, U S West tanked 4, or 6.4%, to 58 1/4 after confirming last week's reports it will merge with Global Crossing in a stock swap valued at $37 billion. Global Crossing, which gave up 7/8 to 60 1/4, said it will fold its planned acquisition of

Frontier

(FRO) - Get Report

into the merged entity. Frontier picked up 1/2 to 56 5/8.

Meanwhile, according to

CNBC's

David Faber

,

Qwest Communications

(QWST)

is considering trying to break up the planned merger with a bid of its own. Qwest swelled 6 1/16, or 7.2%, to 90 7/8

Mergers, acquisitions and joint ventures

Case jumped 3 11/16, or 8.2%, to 48 1/2 after New Holland agreed to acquire the company for $55 a share, or a total of $4.2 billion plus an undisclosed amount of debt. New Holland lost 1 3/16, or 6.8%, to 16 3/8.

Deere

(DE) - Get Report

, for which the merged Case-New Holland is expected to create competition, tacked on 3/8 to 40 13/16.

Dow Jones

(DJ)

added 1/2 to 54 1/8 and

Reuters

(RTRSY)

added 1 to 87 3/8 on word they're combining interactive business services to create an Internet-based database product for corporate clients.

EarthLink Network

(ELNK)

climbed 2 7/8 to 62 3/4 and

Sprint

(FON)

climbed 4 to 110 after announcing they will offer co-branded high-speed Internet access using Sprint's DSL network.

Gulfstream Aerospace shot up 6 1/16, or 10.9%, to an all-time high of 61 11/16 after General Dynamics agreed to buy the jet manufacturer in a $5.3 billion stock swap. General Dynamics sank 6 3/16, or 8.7%, to 65 1/4.

Life USA Holding

(LUSA)

soared 9 3/16, or 90.7%, to an annual high of 19 3/8 after agreeing to be acquired by

Allianz Life Insurance Co. of North America

in a deal valued at $540 million. Allianz Life, a unit of Germany's

Allianz

, said it would acquire all the shares of Life USA it doesn't already own for $20.75 a share in cash.

Medical Manager

(MMGR)

vaulted 13 3/4, or 40.7%, to an all-time high of 47 3/4 after

Synetic

(SNTC)

said it will acquire the medical practice management software firm in a $1.4 billion stock deal. Synetic sliced off 4 5/8 to 91.

TicketMaster Online-Citysearch

(TMCS)

fell 7/8 to 31 7/8 after saying it will acquire

Match.com

from

Cendant

(CD)

. Cendant rose 3/16 to 17 15/16.

TRW

(TRW)

, a defense contractor, lowered 11/16 to 46 7/16 after announcing plans to sell four noncore automotive operations for $1.2 billion to $1.5 billion to reduce debt.

Walbro

(WALB)

grew 2 13/16, or 17.2%, to 19 3/16 after Britain's

TI Group

reaffirmed its $20-a-share cash offer for the company.

Westower

(WTW) - Get Report

slid 2 5/8, or 8.8%, to 27 3/8 after privately held

SpectraSite Holdings

agreed to buy the company in a stock deal calling for Westower shareholders to receive 1.81 SpectraSite shares for each share held.

Wyman-Gordon

(WYG)

rallied 5 11/16, or 42.9%, to 18 15/16 after

Precision Castparts

(PCP)

said it will buy the company for $825 million, including the assumption of $104 million in debt. Precision Castparts dropped 5/8 to 40 3/8.

Xerox

(XRX) - Get Report

slipped 7/16 to 58 3/16 after word it's expected to announce a technology and product alliance with Microsoft tomorrow. The agreement is expected to make it easy to connect Xerox digital copiers to networks running Microsoft software. Mister Softee lifted 2 3/16 to 79 1/8 after an earlier low of 77.

Earnings/revenue reports and previews

Aztec Technology

(AZTC)

hopped up 5/32, or 7.3%, to 2 11/32 after reporting first-quarter earnings of 1 cent a share, in line with the single-analyst forecast and above the year-ago break-even quarter.

Mylan Laboratories

(MYL) - Get Report

skidded 1 3/4, or 7%, to 23 1/4 after recording fourth-quarter earnings of 32 cents a share, on target with the 10-analyst estimate and above the year-earlier 26 cents.

Niagara Mohawk

(NMK)

tacked on 5/16 to 14 1/16 after posting first-quarter earnings of 27 cents a share, topping the five-analyst forecast for 15 cents and the year-ago 8 cents.

Toys R Us

(TOY)

lost 1/4 to 22 after recording first-quarter earnings of 7 cents a share, 3 cents higher than the 16-analyst view and in line with the year-ago figure. The company is hoping for a boost in earnings this quarter with the sale of

Star Wars: Episode I -- The Phantom Menace

-related action figures and video games. (

TheStreet.com

had a

look at what it's like juggling two phones trying to get tickets for Wednesday's opening of the latest

Star Wars

flick.)

Offerings and stock actions

Gerald Stevens

(GIFT)

rose 5/16 to 16 5/8 after filing for a 5 million-share offering of common stock.

Marine Drilling

(MRL)

tumbled 2 1/4, or 15.1%, to 12 5/8 also after announcing plans to offer 5 million shares. Moreover, investors fear the company will miss the June 15 deadline for delivery of an offshore oil drilling rig currently under construction. Missing the deadline will result in the termination of a five-year, $165,000 a day contract with

Exxon

(XON) - Get Report

,

Reuters

reported.

Analyst actions

Air Products and Chemicals

(APD) - Get Report

gave up 2 1/8 to 44 after

Credit Suisse First Boston

cut it to hold from buy.

BellSouth

(BLS)

popped up 1 1/4 to 47 after

PaineWebber

raised it to buy from neutral.

Morgan Stanley Dean Witter cut its ratings on Ford, which lost 3 3/16, or 5.3%, to 57 9/16, and General Motors, which lost 2 13/16 to 80 5/16, to neutral from outperform.

Gottschalks

(GOT)

picked up 3/8, or 5%, to 7 15/16 after

Prudential Securities

raised it to strong buy from hold.

Intermedia Communications

(ICIX)

flew 3 1/8, or 11.3%, to 30 15/16 and

ICG Communications

(ICGX)

flew 1 7/16, or 7%, to 22 1/16 after

Merrill Lynch

upped both names to near-term accumulate from neutral.

Iridium World Communications

(IRID)

declined 1 1/16, or 10.2%, to an annual low of 9 3/8 after

J.P. Morgan

slashed it to underperform from market perform.

Prison Realty Trust

(PZN) - Get Report

dwindled 2 1/16, or 12.1%, to an all-time low of 14 15/16 after

Legg Mason Wood Walker

downgraded it to market perform from buy.

Miscellany

Citigroup

(C) - Get Report

slipped 1 to 70 after saying it will apply for one of the six enhanced banking licenses for foreign banks created by the

Monetary Authority of Singapore

.

Fusion Medical Tech

(FSON)

leapt 11/16, or 10.8%, to 7 1/4 after a bullish piece in

Barron's

quoted Tony Pace of

Pace Partners

hedge fund saying he expects the company's

FloSeal

to receive approval from the

Food and Drug Administration

. FloSeal is a treatment to stop active bleeding during surgery.

Harcourt General

(H) - Get Report

climbed 4 3/8, or 8.8%, to 54 on news it plans to spin off most of its controlling stake in

Neiman Marcus

(NMG)

. Neiman Marcus closed unchanged at 30 1/2. Also,

BT Alex. Brown

upgraded Harcourt to buy from market perform.

Immune Response

(IMNR)

plunged 4 3/16, or 35.6%, to 7 9/16 while

Agouron Pharmaceuticals

(AGPH)

added 5/16 to 59 7/16 after saying an independent data safety monitoring board recommended a Phase III clinical trial of the companies'

Remune

immune-based therapy for HIV patients be terminated.