The blue-chip

Dow Jones Industrial Average was working on gaining back the 240 points it lost Friday.

The

Nasdaq Composite Index, however, had lost earlier gains and was lately in the negative. The broad market, as tracked by the

TST Recommends

S&P 500, lately was rebounding after hitting its closing low for the year Friday.

The market was being buoyed by a story in

The Wall Street Journal

this morning, which said the

Federal Reserve might get really aggressive and announce an interest-rate cut tomorrow instead of waiting until January. The market, however, is pricing in only 46% odds of a rate cut tomorrow, up from 41% Friday. The article helps soften the blow of whatever announcement comes out of the

Federal Open Market Committee meeting tomorrow.

Ever since

Big Al gave a

speech to the

America's Community Bankers Conference

on Dec. 5 -- in which he acknowledged that the past six interest rate hikes had worked and resulted in a visibly slowing economy -- the belief has been widespread that the Fed would say the risk of inflation doesn't exceed that of recession. If Greenspan and his wild and crazy crew decide to adopt an easing stance, it would most likely lead to an interest rate cut next month.

The Dow was being pushed up by financials (read: interest-rate sensitive stocks)

J.P. Morgan

(JPM) - Get Report

,

American Express

(AXP) - Get Report

and

Citigroup

(C) - Get Report

.

Boeing

(BA) - Get Report

was a big blue-chip contributor after it announced a $365 million deal with Chile's leading airline

LanChile

(LFL)

.

Luxury goods company

LVMH Moet Hennessy

(LVMHY)

submitted a bid for high-end clothing maker

Donna Karan

(DK) - Get Report

. Donna Karan shot up 74.4%, while LVMH was inching up 0.5%.

Now here's a shocker. There were more earnings warnings attracting attention. Let's start with online toy retailer

eToys

(ETYS)

, which was the latest Internet company to warn that it's having problems. It was plummeting 69.7% to 28 cents. The company said third-quarter earnings would fall well short of expectations and that it was looking into a merger, asset sale or other type of restructuring in an effort to stay afloat. And as if eToys needed any more pain, its rating and loss estimates were placed on review at

Robertson Stephens

, while

ABN Amro

cut eToys' rating to sell from accumulate. Investors didn't seem to need the encouragement.

Tech stocks were getting whacked after

Goldman Sachs

cut a slew of Internet companies, including eToys, which had its earnings expectations and ratings trimmed. Goldman also slashed estimates on

Ashford.com

(ASFD)

,

BarnesandNoble.com

(BNBN)

and

Webvan

(WBVN)

, citing poor retail trends.

TheStreet.com Internet Sector

index was off 2.7%.

It maintained estimates on

Amazon.com

(AMZN) - Get Report

,

eBay

(EBAY) - Get Report

,

1-800-Flowers.com

(FLWS) - Get Report

and

priceline.com

(PCLN)

.

In a separate move, Goldman removed e-business softwaremakers

BroadVision

(BVSN) - Get Report

and

Blue Martini

(BLUE) - Get Report

from its recommended list because of concerns about potential 2001 budget cuts. BroadVision and Blue Martini were down.

Time Warner

(TWX)

is off 11.3% after saying it is reducing growth expectations for earnings before interest, taxes depreciation and amortization to 11% for full-year 2000, from an earlier projection of 12% to 13%. The media giant in part blamed weakness in advertising on its cable network and weaker than anticipated music sales. Time Warner's merger with

America Online

(AOL)

got a boost last week when the

Federal Trade Commission

gave its approval to the deal. AOL was losing 12.1%.

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Sector Watch

Rising natural gas and oil prices were boosting energy sectors. The

American Stock Exchange Natural Gas Index

was up 3%, while the

Philadelphia Stock Exchange Oil Service Index

was rising 7.8%.

Anticipation of a Fed change had financial sectors rallying. The

American Stock Exchange Broker/Dealer Index

was up 3.2%, while the

Philadelphia Stock Exchange/KBW Bank Index

was moving up 4%.

The

Philadelphia Stock Exchange Semiconductor Index

, which tracks the chip sector, was 0.9% higher.

Xilinx

(XLNX) - Get Report

was the sector's biggest help, up 7.4%. The

International Trade Commission

announced that it would investigate claims that

Altera

(ALTR) - Get Report

is importing products that infringe upon three Xilinx patents. Altera was also gaining, up 2.5%

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Bonds/Economy

The benchmark 10-year

Treasury note lately was 15/32 higher to 104 24/32, yielding 5.123%.

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