(Updated from 4:07 p.m. EDT)

The bulls tried to make a comeback this morning after a brief respite over the past week, but late in the trading day the

Nasdaq had slipped below the flatline and the

Dow Jones Industrial Average's rally lost some of its luster.

The Dow ended the day up by 43.5 points to 10,910; the Nasdaq was off by 27.8 points to 2129; and the

S&P 500 closed just barely lower, by 0.4 points to 1255.

Bullish sentiment that abounded this morning was tempered by concerns a sharp rally in April got ahead of itself, doubts about the viability of a second-half turnaround in corporate earnings and caution ahead of a rash of economic data tomorrow and the

Federal Reserve's meeting on May 15.

The Dow and the Nasdaq are also fighting resistance levels on the upside -- technical levels that are hard to exceed. That's

11,000 on the Dow and 2200 on the Nasdaq. There have been several times recently when the Dow has approached 11,000, only to then turn lower. "Gains are being capped by resistance, and because there is a ton of stuff coming out between now and Tuesday," said Todd Clark, head of listed trading at

W.R. Hambrecht

. "We've got retail sales, wholesale prices and consumer sentiment tomorrow, and then the FOMC meeting Tuesday."

A steady stream of good news last night and this morning inspired the initial bounce in stocks this morning that buoyed some sectors all the way to the close: storage giant

EMC

(EMC)

announced a share buyback and issued an optimistic outlook for spending on information technology in the second half of 2001;

Morgan Stanley

upgraded a slew of large-cap semiconductor capital-equipment makers; several retailers reported

strong same-store sales for April; and the

European Central Bank

unexpectedly cut interest rates, dropping its

benchmark lending rate by a quarter point to 4.5%.

The biggest gains in morning trading were in the retail and chip sectors.

Wal-Mart

(WMT) - Get Report

and

Gap

(GPS) - Get Report

, which both posted better-than-expected same-store sales, were among retail's winners. The

S&P Retail Index

closed up by 2.8%.

Chip-equipment maker

Applied Materials

(AMAT) - Get Report

, one of six stocks upgraded this morning by Morgan Stanley, was up for much of the day but closed off fractionally, lower by 0.1% in heavy trading volume. The

Philadelphia Stock Exchange Semiconductor Index

gained 0.03% after being up by more earlier in the day.

The Dow got a lift from a wide range of Old Economy and retail stocks, particularly Wal-Mart and home improvement retailer

Home Depot

(HD) - Get Report

.

A bull run that started in early April has paused this month as Wall Street digested the market's recent gains. The Nasdaq has been flat since the beginning of May, while the Dow and the S&P 500 have closed slightly lower each day this week. Yesterday's moderate selloff was helped by an unenthusiastic outlook from networker

Cisco

(CSCO) - Get Report

, which also reported its

first-ever quarterly loss. Cisco closed off by 1.6% to $18.83.

Wall Street bears fear April's stellar run-up may have priced in a third-quarter earnings rebound, as well as a half-point interest rate cut.

Federal funds futures indicate bond traders are expecting the Fed to cut short-term rates by a half-percentage point, to 4%, at next week's meeting. If either or both fail to materialize, the markets could feel the pain, bears say. Bonds were trading lower today, pushing their yields higher.

A rush of less-than-dismal corporate earnings news released during the recent earnings season inspired optimism about the third-quarter rebound. But corporate America, as Cisco reminded investors yesterday, has still been unable to give a clear outlook about how business will be in coming quarters.

Some market-watchers expect stocks to go nowhere between now and the Fed meeting, and predict a selloff in its wake -- whether Fed head Greenspan cut rates by a half-point or not.

Whether the market can extend April's rally may depend, in part, on whether the indices can break through their resistance levels. "Unless we can overcome 11,000 on the Dow and 2252 on the Nasdaq, I would argue that we're going to selloff following the FOMC announcement," Clark said. Still, he said that doesn't mean that he's bearish. Any selloff, he says, will just be more digesting of the April rally. "I don't expect a major selloff, just a bit of pullback," he said.

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