(Updated from 11:04 a.m.)

In the wake of a rally last week that left the

Dow Jones Industrial Average only 3.6% off its all-time high, the

blue-chip index was lately near the flatline, but on the positive side. The

Nasdaq Composite Index was swinging much higher.

After the

Federal Reserve cut interest rates for the fifth time this year and stocks jumped in a delayed response, markets were relatively quiet this morning. Many market experts said they expect the major averages to move in a narrow trading range ahead of the Memorial Day holiday weekend

"Mostly, I'm looking for trading opportunities to protect my positions," said Sam Ginzburg, senior managing director of equity trading at

Gruntal

.

Driving today's market are some positive analyst reports and a smattering of retail earnings. Wall Street will likely pay close attention to some of the bigger reports, because recent economic data showed signs of strength in retail sales and consumer sentiment. The sector's stocks have risen steadily in April and May -- and several companies are hitting new 52-week highs.

Lehman Brothers

boosted its earnings estimates for home improvement retailer

Lowe's

(LOW) - Get Report

, which this morning said it beat earnings estimates. It was recently rising 5.4% to $72.06, a new 52-week high.

Toy seller

Toys R Us

(TOY)

was up 4.9% to $30, also hitting a new 52-week peak, after reporting a greater loss than was expected for its first quarter. But it said it was comfortable with estimates for the full year.

Clothing retailer

Limited

(LTD)

didn't have that positive outlook. It was down 4.7% to $16.30 after it warned that earnings in the second quarter and for the full year would be lower than previously expected. Its first-quarter earnings were in line with analyst estimates.

The

S&P Retail Index

was squeaking higher, up 0.1%. Internet and chip stocks were also gaining.

Internet software maker

Vignette

(VIGN)

was rising 9.3% to $10.95 after

Salomon Smith Barney

upgraded the company this morning.

TheStreet.com's

Jim Cramer weighed in on the upside in

Vignette last week. Solly, as the investment house is known, also raised its recommendation on media and entertainment company

Disney

(DIS) - Get Report

, which was recently ahead 5.3% to $34.33.

Stocks surged last Wednesday in a delayed response to the Fed's rate cut, and investors followed through on those gains for the rest of the week. Since Wednesday, the Dow has been trading strongly

above 11,000, a benchmark level that it hadn't seen since last September. Since hitting a recent low of 9,389.48 on March 22, the industrials are up 20.4% as of Friday's close. They're ahead 4.8% for the year.

The Nasdaq also gained last week, but the tech-heavy index has been unable to break through a technical resistance level, which market analysts put around 2250. Since hitting a recent low of 1638.80 on April 4, the Comp is up 34%. But it's still down 11% for the year, and 56% off its all-time high.

The Fed's fifth rate cut last Tuesday seems to have reignited the bulls' faith the economy will get back on its feet. During April, when stocks enjoyed a stellar monthlong rally, investors clung to the belief there would be a second-half rebound. But that faith is going to require some confirmation in coming weeks.

The second-quarter preannouncement season -- when companies let the market know if they don't expect to make their performance targets -- is just beginning. In a report released this morning, earnings tracker

Thomson Financial

said it believes this season will be better than the first-quarter warning season was. On balance, there are more positive preannouncements creeping into the market and the negative warnings are coming from smaller companies compared to previous quarters. "We believe the second-quarter preannouncement season, despite an expected greater number of earnings warnings, will not be as severe as the first quarter," the report said.

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