The bears were trying to make a neat little picnic lunch out of the

Dow this morning.

Just 10 minutes into the morning's trading, the blue-chip index crossed below the 9378 mark and into bear market territory -- defined as 20% off of a proxy's highs. Just two weeks ago, the Dow was at 10,858.

The broader market was also lower, but tech stocks were trying to add some mediocre gains as investors went on the prowl for some bargains. Software giant and Dow component

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(MSFT) - Get Report

was rising despite a negative note out of

Goldman Sachs

this morning. And some analog and mixed-signal chipmakers were also moving up even though

Lehman Brothers

issued a

negative outlook on the sector.

Volatility in the S&P 500 spiked to 38.2 this morning, a two-year high, but still shy of the bear-market selloff of 1998. Volatility often spikes when stocks are nearing


Today's dip-buying exercise is quite familiar and hasn't worked for the

Nasdaq in the recent past. Still, when investors can shrug off bad news, it's always a good sign that investors think some kind of bottom is in place.

Chip stocks and PC-makers were essentially the only gainers in the Dow. Drug stocks, brokerages and retailers were the pits in early trading.

Based on earnings preannouncements in the PC sector, Goldman analyst

Rick Sherlund said he expects Microsoft to miss fiscal third-quarter consensus revenue estimates of $6.2 billion, but to make its own targets. Sherlund now sees the company coming in with revenue that's down 10% from the previous quarter. Worse, the analyst forecasts flat to down earnings for each of the next four quarters and flat earnings for fiscal 2002. Sherlund tempered his report by saying, "We believe investors may become more positive on the stock if, indeed, much of the bad news is now out." Investors have knocked the stuffing out of Microsoft over the past 16 months, leaving it $60 lower to around $50 a share. Microsoft was up 2.5% to $51.38.

The Nasdaq is now 64% off its high -- hit last March 10 -- while the S&P 500 is down 27% from its high. The

Federal Reserve's rate-cut disappointment on Tuesday hasn't boosted sentiment much. The market was hoping the Fed would chop rates by 75 basis points, but instead it got a reduction of just half a percentage point. 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%.

After weeks of aggressive selling in the stock market, some market pros have begun saying stocks look very oversold and are due for a bounce. All the bad news is finally out, they say. But that is probably optimistic. There has been little indication of when the economy or the corporate earnings picture will turn around, and until that becomes clear it's hard to know how to value stocks. If earnings forecasts continue to slog lower with the force that they have in the past six months, stocks may take another beating.

Not today.

Dallas Semiconductor

(DS) - Get Report

was the latest semiconductor company to

warn, saying last night that its first-quarter revenue would fall roughly 30% sequentially because of canceled and rescheduled orders. The stock was lately up 3.6% to $29.16.

For the first quarter ending April 1, Dallas Semiconductor expects to post revenue that is 30% below the top line of the $130.1 million the company reported for the fourth quarter. Analysts surveyed by

Thomson Financial/First Call

expect the firm to report $128.1 million.


Micron Technology

(MU) - Get Report

was also up after delivering some mixed news last night. The company said sales for the quarter were "slightly profitable" at $1.05 billion. But the Boise, Idaho, company called

visibility "hazy" and

postponed announcing its earnings results because of a delay by a subsidiary. The company reportedly said in a conference call that its inventory level was dropping. Micron was rising 6.8% to $44.88.

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