Rally or ambush? That's the question traders and investors were asking themselves this morning as tech stocks sought to revive themselves after

yesterday's thrashing. After an hour of trading, those long the market were beginning to look for booby traps as early gains evaporated.

As many players expected, investors initially forsake the recently torrid cyclical stocks for perceived bargains in techland. Drug makers were also recovering from their recent losses, while financials continued to exude strength thanks to strong earnings at

Chase

(CMB)

and a 3-for-2 stock split announcement by

Citigroup

(C) - Get Report

. But groups initially in favor slackened while the laggards weakened further.

The

Dow Jones Industrial Average

was fading as the morning progressed, lately down 50 to 10,390. Recent favorites

Chevron

(CHV)

and

United Technologies

were pacing the Dow's retreat. Cyclicals overall were recoiling from recent gains -- the

Morgan Stanley Cyclical Index

was down 2%.

Coming off one of its worst days in history, the

Nasdaq Composite Index

was the best performer of major indices in the early going, rising as high as 2379.90. But the tech-befuddled index was off its session highs, last up 5 to 2351.

Bellwethers such as

Dell

(DELL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

led the initial bounce, but were struggling to sustain the forward momentum. The

Nasdaq 100

was up fractionally.

Ahead of its profit report, due after the close,

Microsoft

(MSFT) - Get Report

was up fractionally. The software colossus is expected to post third-quarter profits of 32 cents a share vs. 25 cents a year ago, according to the 21-analyst consensus.

Internet stalwarts also hit a pothole on the comeback trail. With

America Online

(AOL)

and

Amazon.com

(AMZN) - Get Report

notably retreating from early gains,

TheStreet.com Internet Sector

index was down 8 to 523 after rising as high as 579.23 early on.

Elsehwere,

Inktomi

(INKT)

was up 15% and

DoubleClick

(DCLK)

was higher by 11%, after

Goldman Sachs

upped its recommendation on each to the recommended list from market outperform.

E*Trade

(EGRP)

was up 4 3/4 to 78 7/8 after posting a narrower-than-expected second-quarter loss.

But in the Net-stocks-are-still-dangerous category,

Network Associates

(NETA)

was down 32% after

last night posting a disappointing first-quarter earnings report and a dim outlook for the second quarter.

The

Russell 2000

was lately down 1 to 411.

10:00 a.m.: Stocks Mostly Higher After Monday's Collapse

The market's major barometers were mostly higher early on as technology and Internet stocks begin to bandage the heavy losses they suffered

yesterday while a flood of key earnings reports hit Wall Street.

The

Nasdaq Composite Index

was up 23 to 2369.

TheStreet.com Internet Sector

index was up 4 to 565.

The

Dow Jones Industrial Average

was down 13 to 10,428. The

S&P 500

was up 4 to 1294. The

Russell 2000

was up 2 to 414.

The 30-year Treasury bond was down 4/32 to 95 31/32, yielding 5.53%.

Philip Morris

(MO) - Get Report

recently posted first-quarter operating earnings of 80 cents a share, in line with the 12-analyst estimate. It was up 3/4 to 33 7/8.

Most Up at Open -- NYSE

Citigroup (C) - Get Report, up 3 1/4 to 73

: Citigroup set a 3-for-2 stock split.

Morgan Stanley Dean Witter

raised its 12-month price target on the stock to $87 from $79.

Most Up at Open -- Nasdaq

DoubleClick (DCLK) , up 9 5/8 to 113 5/8

:

Goldman Sachs

upgraded the company to its recommended list.

Most Down at Open -- NYSE

Telebras (TBH) , down 2 11/16 to 84 5/8

.

Most Down at Open -- Nasdaq

Go2Net (GNET) , down 10 1/4 to 136 1/2

.

--

Brian Louis