(Updated from 2:36 p.m. EST)

The bulls and the bears continued to duke it out this afternoon, but the bulls ended up goring those pesky bears. After dancing in and out of bear country all morning, the Dow was lately sporting triple-digit gains. That puts it safely out of bear market territory -- defined as 20% off an index's highs, or 9378 for the blue-chip proxy. The Nasdaq was also in the green.

Near midday, rumors surfaced that networker

Cisco

(CSCO) - Get Report

might issue an earnings warning after today's market close. Shortly afterwards the Nasdaq and Dow spun south. Some traders speculated the rumors might have been generated by hedge funds still short the market. (Investors who short the market are betting stocks will go down.) Cisco was lately the most actively traded stock on the Nasdaq and was falling 5.1%.

Sellers and buyers were out in full force and volume was thick as malt liquor in afternoon trading. On the NYSE, 1.4 billion shares traded hands, while on the Nasdaq 2.2 billion shares changed hands. Daily averages on the NYSE and Nasdaq are 1.2 billion and 1.7 billion, respectively.

You're a Loser, Baby

Biotech

Immunex

(IMNX)

was also getting a lot of attention on Wall Street after it

announced that two drugs it was counting on flunked early testing. The second most actively traded stock on the tech index, it was off 39.1% to $11.50. But otherwise biotechs were faring pretty well. The sector has been the target of furious selling in the past few months, and the

American Stock Exchange Biotechnology Index

is off about 33% for the year.

As is often the case when companies report bad news, analysts lined up to

scold the company, with negative reports from

Lehman Brothers

,

Credit Suisse First Boston

and

ING Barings

.

Also hitting the Nasdaq was

CyberOptics

(CYBE) - Get Report

, which makes optical technology components. The company said it would fall short of first-quarter estimates by 56% because of weak sensor sales to semi equipment makers. The stock hit a 52-week low earlier today, but was off its lows, down 11.6% to $11.

For the most part, big-cap tech stocks were overcoming these pockets of weakness.

Oracle

(ORCL) - Get Report

,

Dell

(DELL) - Get Report

and

Microsoft

(MSFT) - Get Report

were just a few of the heavyweights chalking up modest gains in recent action.

Meanwhile, further evidence that tech was the place to be -- PC-making giant

IBM

(IBM) - Get Report

was the Dow's biggest supporter today, contributing 35 positive weighted points to the index. The Dow's other tech components were also up strongly, making that the index's strongest sector.

Financials were another strong sector on the Dow, with

American Express

(AXP) - Get Report

,

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

each contributing 12 or more points to the index.

Consumer products giant

Procter & Gamble

(PG) - Get Report

and home improvement retailer

Home Depot

(HD) - Get Report

were the biggest drags on the Dow -- slashing 24 weighted points from the index. Procter & Gamble still got hit with fallout from its announcement yesterday that it was

cutting 9,600 additional jobs in an effort to further reduce overhead costs.

The consumer products company got a couple of raps on the knuckles from

Prudential Securities

and

Lehman Brothers

. Prudential's Constance Maneaty said in the research note, "Another restructuring points up that P&G has lost its competitive edge in many categories." And

Lehman Brothers

lowered its 2002 earnings estimates on the company this morning.

A smattering of cyclical and defensive sectors continued to rise despite the pullback. Defensives like the drugs and tobacco stocks were moving up along side of chips, PC makers and financials. But retail, gold and airline stocks were on their way down. The chip stocks led yesterday's rally on the Nasdaq and, despite a negative outlook for inventories in the sector, some say it's

bottomed out .

A whiplash selloff and final-hour rebound on the Dow yesterday, sky-high trading volumes on all indices and volatility levels through the roof are all classic signs of

capitulation, according to the experts. The Dow dove over 300 points at yesterday's open, but erased most of those losses into the close, ending off

just

97.5 points to 9389.5, or 19.9% below its highs of last year. Capitulation is a momentous selloff that slams stocks so low that they look cheap enough to draw buyers back in. A capitulation selloff supposedly creates a "bottom," or a level through which stocks are not supposed to crash again.

But market pros have cried wolf a few too many times since April -- several bottoms have been called and none have held. The earnings picture hasn't yet cleared up, and the economy still looks weak. If earnings forecasts continue to slog lower with the force they have in the past six months, stocks could take another beating.

Stocks don't usually go straight up after hitting bottom anyway. They slog around in a range above that mark and often retest their lows. The Nasdaq remains some 64% off its high -- March 10, 2000 -- while the S&P 500 is down 27% from its high. Unlike January, when interest-rate cuts overjoyed Wall Street and spurred a heady monthlong market rally, a half-point interest rate-cut on Tuesday

hasn't yet lifted the market. Investors were hoping the Fed would chop rates by 75 basis points, rather than by the 50 basis points they opted for.

Fed chairman

Greenspan and his team have now dropped interest rates by a full 1.5% since Jan. 3, putting short-term rates at 5%. Maybe today -- three days after the fact -- marks the start of the market's upward move in response.

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