Market Mixed to Higher as Traders Tread With Some Caution

Concerns that last week's tech-led rally was overdone are mingling with a desire to keep it going.
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Last week's feel-good economic data gave set the stage for a Wall Street pep rally that pumped the Nasdaq up almost 19% in four days. When the game began today, investors continued to implement the once-winning plays used before the correction days, rotating money out of safety zone sectors like financials and consumer staples and into tech. But many bulls remembered the agony of defeat and decided sit out and scale back on their wagers before getting roughed up again.

With volatility on their minds, investors were skeptical that good news from economic data could stop the

Fed from taking rates higher at the next scheduled

Federal Open Market Committee meeting, June 28. Although the numbers did indicating the

Greenspan plan was having some effect, not everyone was confident that it was a reason to jump head-first into the market again.

"This morning's selloff was on the basis that people felt that maybe we got ahead of ourselves," said Matt Johnson, head of Nasdaq trading at

Lehman Brothers

, referring to last week's 19% pop in the Nasdaq Composite Index. "If anything comes out of the correction, people are remaining more disciplined about what they're buying. We're two weeks before preannouncement season and they want to make sure they know the story before going in and buying again."

Lately, the Nasdaq remained up 16, or 0.4%, to 3830, with

Qualcomm

(QCOM) - Get Report

losing after

China Unicom

said it abandoned plans to use Qualcomm's CDMA technology.

In Nasdaq trading, biotech stocks were lifting.

Affymetrix

(AFFX)

and

Protein Design Labs

(PDLI) - Get Report

taking the lead. This morning,

Merrill Lynch

upgraded shares of

Human Genome Sciences

(HGSI)

.

The

Nasdaq Biotech Index

was advancing 2.9%.

But stocks remained mixed, as nervous investors contemplated the market's uncertainty in the face of a slowing economy. "We're seeing some profit-taking after last week's solid gains, and the absence of substantial economic news still has people guessing," said Peter Cardillio, chief strategist at

Westfalia Investments

, referring to the future of rates.

Elsewhere in techland,

TheStreet.com Internet Sector

index was sliding 15, or 1.6%, to 931, with

eBay

(EBAY) - Get Report

among the leaders on the downside.

But

Advanced Micro Devices

(AMD) - Get Report

was fired up almost 4.2% after saying it would unveil a new chip that has

IBM

(IBM) - Get Report

,

Compaq

(CPQ)

and

Hewlett-Packard

(HWP)

designing PCs accordingly.

Lately, the

Dow Jones Industrial Average was coming back off of its session lows, mounting 37, or 0.4%, to 10,832, with tech components H-P and IBM keeping it afloat. H-P was surging 10.4%, while IBM was up 3.9%.

Although the financials managed to scale back some of their early-morning losses, the sector's stocks continued to suffer with

J.P. Morgan

(JPM) - Get Report

falling 3.4% and

American Express

(AXP) - Get Report

down 1.6%.

The

American Stock Exchange Broker/Dealer Index

was down 2% and the

Philadelphia Stock Exchange/KBW Bank Index

was off 3%.

The drug sector was also declining, with the

American Stock Exchange Pharmaceutical Index

off 0.4%.

"Last week's rally was about 40% based on evidence and 60% based on hope," said Jim Weiss, deputy chief investment officer of

State Street Research

. "The big negative of rising rates appears to be off the table, and now were seeing the erosion of names that had been the beneficiary of the tech decline -- consumer staples, financials and health care -- and those flows are exactly reversing themselves."

Market Internals

Breadth was mixed and volume was tepid.

New York Stock Exchange:

1,236 advancers, 1,578 decliners, 507 million shares. 37 new 52-week highs, 19 new lows.

Nasdaq Stock Market:

2,100 advancers, 1,791 decliners, 916 million shares. 59 new highs, 42 new lows.

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