After an early sojourn into positive territory, stocks lately came back down to earth. The

Nasdaq Composite Index and

Dow both were lately lounging just under the flatline. The broader market

S&P 500

was unchanged.

As earnings season begins to wind to a close and after a rash of important economic data, the market doesn't have much wind under its wings this morning. Meanwhile, there've been plenty of negative tech earnings in the past month, peppered with a few pleasant surprises. And until investors see concrete signs that tech fundamentals -- demand, inventories and capital spending -- are improving, they'll likely continue to buy defensive stocks like energy, tobacco and consumer staples.

Cisco

(CSCO) - Get Report

remained the most popular trade today, after its

earnings miss Tuesday night motivated a selloff yesterday. An early snap-back had lately faded, and the networking darling was lately off 1.6% to $30.63.

Other bellwethers were still in the green, but had pared back their opening gains.

Intel

(INTC) - Get Report

was up 0.2%; PC maker

IBM

(IBM) - Get Report

was up 0.5%; and Internet and media goliath

AOL Time Warner

(AOL)

was lifting 2.1%.

Microsoft

(MSFT) - Get Report

has been dribbling lower all morning after

Merrill Lynch

cut its long-term rating to accumulate from buy. The software giant was losing 2.1% to $63.25.

On the Dow, too, some of the early leaders had faded away.

Philip Morris

(MO) - Get Report

,

General Electric

(GE) - Get Report

,

Honeywell

(HON) - Get Report

and

Disney

(DIS) - Get Report

were lately the biggest winners on the blue-chip measure. Financial

American Express

(AXP) - Get Report

was still in the green but had slipped back.

Investors were happy enough with in-line earnings from troubled telecom heavyweight

WorldCom

(WCOM)

. WorldCom reported fourth-quarter earnings per share of 25 cents, meeting analyst estimates. But like a lot of companies this earnings season, the analyst estimates had been reduced.

WorldCom has seen its stock price sliced from a high of $63.50 all the way down to the midteens in the past year and a half. It's been hurt by weakness in the consumer long distance business, as well as the company's failure to buy competitor

Sprint

(FON)

.

Meanwhile, investors continue to keep a close watch on each and every data point to help divine the

Federal Reserve next move on interest rates. This morning,

initial jobless claims for the week ended Feb. 3 showed that claims increased 361,000. Economists polled by

Reuters

expected new claims to rise to 348,000 from 346,000. Yesterday's

productivity report showed that workers continued to be more productive during the fourth quarter.

The Fed began cutting interest rates in early January to jump-start economic growth, and market-watchers have been expecting the cuts to help corporate earnings and the economy turn around in the second half of this year. But that depends on the economy's ability to react to rate cuts. After a year and a half of raising interest rates to rein in a runaway economy, the Fed cut interest rates twice last month. Those moves slashed short-term rates by a full point to 5.5%, almost an unprecedented drop in so short a time.

Historically, stocks tend to perform very well following Fed interest rate cuts. But some expect that stocks are going to have to move lower before they put in a real rally.

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Sector Watch

The chipmakers were trying to recover from a five-day selloff today, but an early attempt was lately losing steam. Earlier up as much as 3%, the

Philadelphia Stock Exchange Semiconductor Index

was now up just 1.3%. Most sector heavyweights remained in the green, however.

LSI Logic

(LSI) - Get Report

was climbing 1.3%,

Altera

(ALTR) - Get Report

rising 1.2% and

Micron Technology

(MU) - Get Report

higher by 2.1%.

An initial rebound in financials also wasn't going much of anywhere. The

American Stock Exchange Securities Broker/Dealer Index

was up 0.5%, while the

Philadelphia Stock Exchange/KBW Bank Index

was just slightly negative, down 0.04%.

J.P. Morgan Chase

(JPM) - Get Report

had lately turned down ever so slightly as well, by 0.06% to $52.30, while

Citibank

(C) - Get Report

was 0.5% lower to $54.04.

Financials sold off following the Fed's most recent interest rate cut, as investors feared that stocks had ratcheted up too much before the fact. The Fed announced it was cutting the interbank lending target rate by a half point on Jan. 31.

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Bonds/Economy

Treasury prices are lower in thin trading. The longer-dated securities are under greater supply-side pressure as the market awaits the auction of $10 billion worth of the 30-year bond. Dealers are selling in order to drive down the auction price.

The benchmark 10-year

Treasury note lately was down 13/32 to 98 29/32, raising its yield to 5.141%.

In economic news, the

initial jobless claims

(

definition |

chart |

source

), which tracks the number of laid-off workers applying for unemployment benefits for the first time, rose for the third consecutive week. The bond market has already priced in this trend, however. There were 361,000 claims for the period ended Feb.3, up from 346,000 the previous week. Economists polled by

Reuters

had forecast 348,000. The four-week moving average, considered the more reliable indicator of unemployment, rose to 331,250 from 327,000.

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