Investors were peering into the blur of the 2001 tech earnings picture with dread and uncertainty this morning, and the tech-loaded

Nasdaq dribbled lower at the open.

Cisco

(CSCO) - Get Report

, which reports fourth-quarter earnings tomorrow was a popular whipping post. The networking giant was the most actively traded stock on the Nasdaq, and was lately off 3.2%.

The Cisco kid almost always beats earnings targets by a penny, and investors want to see if the can pull it off in this lousy earnings environment.

Other networkers,

Cabletron Systems

(CS) - Get Report

,

Nortel Networks

(NT)

and

Avaya

(AV)

were following Cisco's lead. Cabletron was lately losing 5.2%, Nortel was losing 1.5% and Avaya was losing 4.1%.

And the semiconductor sector was getting slammed by a negative report on sector inventories out of

Credit Suisse First Boston

. Citing data from the

Semiconductor Industry Association

, the firm said inventory levels have worsened in recent months and could likely take to the end of the second quarter to burn off. Semiconductor titan

Intel

(INTC) - Get Report

was off 1.8% and the

Philadelphia Stock Exchange Semiconductor Index

was falling 3.7%. The majority of the major tech bellwethers were also lower.

Sun Microsystems

(SUNW) - Get Report

was down 2.6%, and PC makers

Hewlett-Packard

(HWP)

and

Dell

(DELL) - Get Report

were falling 0.5% and 3.5%.

IBM

(IBM) - Get Report

was up 0.8%.

The blue-chip

Dow, meanwhile, was shuffling higher making middling gains. Leading the index higher was consumer products giant

3M

(MMM) - Get Report

, with 15 points of upside, and

ExxonMobil

(XOM) - Get Report

with 7 points.

Oil stocks, in fact, were getting a major boost from rises in crude oil prices. Oil prices rallied 4.6% Friday, the biggest gains in two weeks, and they were rising again this morning, lately trading at $31.19.

The

American Stock Exchange Oil & Gas Index

was up 1%.

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One of the latest energy companies to report strong fourth-quarter earnings due to the price of oil,

Williams

(WMB) - Get Report

was up 2.2%. The company reported fourth-quarter earnings per share of 57 cents this morning, well above the 22-cent estimate of analysts polled by

First Call/ Thomson Financial

. The company expects to meet existing performance expectations for 2001.

But

Phillips Petroleum

(P)

wasn't participating in that party. The stock was down 9.6% to $52.50 after announcing yesterday that it had agreed to buy

Tosco

(TOS)

for $7 billion in stock. Tosco was trading 14.7% higher in early action.

General market sentiment is probably a bit soggy after Friday's

employment report softened investor expectations about how aggressive the Fed might be with further rate cuts. In early January, the Fed dropped benchmark interbank lending target for the first time in a year and a half. Following that half-point cut, it lowered rates by another half point last week to 5.5%.

The market hungers for rate cuts. Rate cuts encourage consumer and corporate spending, which help get the economy back on its feet. Some economists argue that the economy is already in recession and certainly moving in that direction.

The Fate of Earnings

Meanwhile, a couple of market strategists this morning began predicting an earnings recession for 2001.

Joseph Kalinowski of earnings tracker

I/B/E/S

said the

Nasdaq 100

is due for a profits recession and that "there is a great possibility that the S&P 500 is heading there as well."

On average, analysts are expecting Nasdaq 100 earnings growth of 1.6% for 2001, which means "negative growth" for the entire year is a "viable risk," according to the report.

Still, Kalinowski says the velocity of consensus revisions to earnings estimates is slowing, and 2001 earnings could get a "late boost from a solid fourth quarter."

Prudential Securities

meanwhile, reduced its forecast for S&P 500 earnings growth in 2001. The firm was previously expecting little or no growth but now sees a drop in 2001 vs. 2000, "with no change a best case." Prudential now thinks S&P 500 2001 EPS will be $53 to $55.50 vs. about $55.50 for 2000 for the companies now in the S&P 500 index.

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Sector Watch

Retail stocks were soft this morning, despite upgrades on retailers

AnnTaylor

(ANN)

and

Dillard's

(DDS) - Get Report

. The

S&P Retail Index

was falling 1.2%, AnnTaylor was down 2.6% and Dillard's was lately up 17.1%.

AnnTaylor was upgraded to outperform from neutral at

Morgan Stanley Dean Witter

, though

Prudential Securities

reduced its fourth-quarter earnings estimates on the company to 33 cents a share from 38 cents a share. Dillard's was raised to buy from neutral at

Salomon Smith Barney

.

Prudential also lowered its fiscal 2001 earnings estimates for

Abercrombie & Fitch

(ABF)

to $2.80 per share from $2.85. Abercrombie & Fitch was down 3%.

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Bonds/Economy

Treasuries were flat this morning, with the benchmark 10-year

Treasury note up 4/32 to 104 13/32, yielding 5.156%

Treasury prices ended last week in retreat as traders lowered their expectations of another intermeeting cut in interest rates. The resulting rise in yields was more pronounced among longer-term securities.

The money market had been rallying for three consecutive days as the Federal Reserve announced a half-point lowering in the

fed funds rate on Wednesday.

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