(Updated from 10:47 a.m. EST)

Tech stocks were elbowing their way higher this morning, while blue-chips were adding to Monday's three-digit winnings.

After so much tech selling in the past few days, investors may be trying to compensate for the possibility that networker

Cisco

(CSCO) - Get Report

will report OK earnings today after the market closes. Cisco's earnings are expected to set the tone for the beleaguered infrastructure sector. After falling sharply in the past two weeks, Cisco was trading 2.7% higher just before midday. It was the most actively traded stock on the

Nasdaq.

On the other hand, fears of a recession in earnings and the economy continue to preoccupy the market and should put a cap on buying. In fact, volume was relatively light on both the

Nasdaq and the

Dow. A negative report on

Amazon.com

(AMZN) - Get Report

out of

Lehman Brothers

analyst Ravi Suria this morning also helped to dampen some spirits.

Suria said Amazon.com's working capital or net available liquidity at the end of fourth quarter is only $386 million, "well below our estimated liquidity requirements for the year." He said the liquidity problem could cause a creditor squeeze in the second half of the year, "creating considerable downside risk to revenue and cash estimates for the second half." Amazon was down 2.6% to $14.12.

Optical components maker

JDS Uniphase

(JDSU)

was another favorite today after it received approval from the

U.S. Justice Department

for its acquisition of rival

SDL

(SDLI)

. JDS was up 5.4% to $52.69 and SDL was soaring 7.8% to $199.88.

Antitrust concerns regarding the $17.6 billion acquisition were resolved after JDS Uniphase agreed to sell a laser plant to

Nortel Networks

(NT)

for about $3 billion. The Justice Department was concerned the merged JDS Uniphase and SDL would monopolize the market for lasers used to amplify signals on fiber networks.

TheStreet.com

wrote a

separate story on the news.

PC makers

Hewlett-Packard

(HWP)

and IBM

(IBM) - Get Report

were adding a lot of upside to the Dow -- a combined 27 points, in fact. J.P. Morgan Chase

(JPM) - Get Report

was the biggest drag, taking away 7 points from an index that is overwhelmingly positive today.

Investors will probably trade cautiously ahead of tomorrow's

productivity report. High productivity has been responsible for the economic boom of recent years, allowing for strong growth without runaway inflation. The big question now is whether the

Federal Reserve can help stave off a recession in corporate earnings and throughout the economy. General market sentiment may remain soggy after Friday's

employment report softened investor expectations about how aggressive the Fed might be with further rate cuts. The Fed cut rates twice last month in an effort to reignite economic growth. The market hungers for rate cuts since they make it cheaper to pay off debt and encourage consumer and corporate spending.

On today's data front, consumer spending moved to the front burner, with the release of the latest

BTM-UBSW Weekly Chain Store Sales Index

for the week ended Feb. 3 and the

Redbook Retail Average

for the month ended Feb. 3. Consumer spending is the biggest contributor to the U.S. economy, so it's a good gauge of how far and how fast the economy is moving. The weekly BTM-UBSW index fell 0.1% in the week ended Feb. 3, compared with a 0.6% rise in the week ended Jan. 28.

The Redbook Retail Average, which will be released at 10:30 this morning, rose 2.2% for the month ended Jan. 3. Investors have focused much attention on the retail sector since the last holiday season showed consumers had clearly slowed their shopping trips.

The Cisco Thing

Many on the Street expect Cisco's earnings release late this afternoon could set the tone for all tech infrastructure companies in the coming weeks and months. But it's the company's outlook and not the most recent results that are the real concern. Cisco almost always beats earnings estimates by a penny, and analysts expect it will do so again -- even though CEO John Chambers recently spoke words of warning about the company's business in January. But back in early December, Chambers also revised his earnings growth forecasts for 2001 year to between 30% and 50% from 55% to 65%.

"We've got Cisco coming out, and for the last couple of days people have had enough time to go short and sell stocks," said Ray Hawkins, vice president of block trading at

J.P. Morgan

. "There should be some stability today. It feels firm. But we're going to build into a trading range over the next six months -- people don't want to pay ridiculous price-to-earnings valuations right now. They're looking for bargains."

For Cisco, and all companies, there is concern about visibility -- or companies' ability to

forecast future performance at this murky juncture in the economy. Many companies in the networking- and chip-making space have recently complained of poor visibility. These include networking chipmaker

PMC-Sierra

(PMCS)

, optical producer

Corning

(GLW) - Get Report

and fiber-optic components giant

JDS Uniphase

(JDSU)

, among others. Confessions of clouded visibility suggest that the expected pickup in business in the second half of 2001 may not be trustworthy. And that's no good for stock valuations.

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Sector Watch

Semiconductor stocks were climbing out of yesterday's watery grave, with the

Philadelphia Stock Exchange Semiconductor Index

up 2.8%. Yesterday's selloff was precipitated by negative reports on inventories out of the

Semiconductor Industry Association

and several research firms.

Boxmakers were also stronger, while financials, commodities and gold stocks were weak.

After a strong run since last July, some health care stocks were lower today. The

S&P Health Care Index

was up just 0.4%. Long-term care business

Manor Care

(HCR) - Get Report

was off 0.7% to $20.45, and HMO

Humana

(HUM) - Get Report

was down 4.2% to $12.25. Both stocks have been rising steadily since July of last year -- Manor Care has ballooned 189% since then, while Humana has rocketed up 140%.

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Bonds/Economy

Treasury notes are trading slightly lower -- though near unchanged -- as the market awaits the auction of $32 billion worth of new and reopened Treasury debt. Dealers are selling to create space in their portfolios for the latest available issues due on the market later this afternoon. The long bond has slid further in reaction to the advice of a

Bond Market Association

committee that its issue be continued.

Last week the Treasury Borrowing Advisory Committee, composed of investors, had suggested that the 30-year bond be removed after its August sale, due to continued Federal budget surpluses. However, yesterday the Primary Dealer Committee of the BMA, composed of dealers that trade directly with the

Federal Reserve in the Treasury market, advised against it. They want to lessen the cost of buying back older debt. The committee also said that the 30-year remained the most suitable security for long-term bond investors.

The benchmark 10-year

Treasury note lately was down 1/32 to 104 7/32, raising its yield to 5.185%.

In economic news, the

BTM-UBSW Weekly Chain Store Sales Index

(

definition |

chart ) was down 0.1% for the week ended Feb.3 after having advanced 0.6% the previous week. The slight fall was due to a decrease in consumer spending, with no retailer exceeding the weekly sales target. The yearly moving average rose 3.7% from its reading 12 months earlier, although it was down from the 3.9% rise recorded in the end of January. Analysts believe that consumer spending is unlikely to fall further. They expect spending to revive, thanks to the cash freed up through mortgage refinancing, lower tax rates and the Fed's easing of interest rates.

The

Redbook Retail Average

(

definition |

chart ) rose for the fifth week of January. It is up 2.2% from its value in the closing week of December. Sales for the month rose 3.2% from the same period a year ago. Sales are expected to rise 3.1% in February. Heavy promotions and heavy discounts sent merchandise moving off shelves, keeping sales numbers healthy.

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