Cyclicals are suddenly looking sickly, but tech favorites were having a hard time benefiting this morning. Funds are rotating back into growth stock favorites such as technology and drugs after

yesterday's debacle, but many investors appear reluctant to expose themselves to another potential pistol-whipping.

Market players expect more indecision in the afternoon and coming days.

"Even with all the blatant and transparent rotation over the past five to seven trading days, a lot of investors seem to be playing a guessing game right now," said Brian Belski, chief investment strategist at

George K. Baum

. "Such a scenario likely explains the excess volatility that is causing the wild swings and emotional trading patterns taking place lately."

As high noon approached on Wall Street, however, some gunslingers were getting their nerve up once again.

The

Nasdaq Composite Index

was lately up 30 to 2376 and reproaching its initial high of 2379.90 after bouncing off a subsequent drop to 2329.87.

Dell

(DELL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

have been the best performers among tech bellwethers throughout the session, helping the

Nasdaq 100

rise 2%.

Meanwhile,

Microsoft

(MSFT) - Get Report

has improved in the past hour. Ahead of its profit report, due after the close, the software behemoth was lately up 2%. Mr. Softee is expected to post third-quarter profits of 32 cents a share vs. 25 cents a year ago, according to the 21-analyst consensus.

Strength in the aforementioned helped the

S&P 500

climb 9 to 1299. The index was also being aided by resurgent drug makers, which rallied after steep declines yesterdays. Stronger-than-expected earnings from

Johnson & Johnson

(JNJ) - Get Report

and an in-line but promising report from

Schering-Plough

(SGP)

helped reinvigorate the group. The

American Stock Exchange Pharmaceutical Index

was up 3%.

Cyclical stocks were struggling, however: The

Morgan Stanley Cyclical Index

was down 2%.

Weakness in

Chevron

(CHV)

and

United Technologies

were weighing on the

Dow Jones Industrial Average

, lately down 57 to 10,384. Chevron was down 5% after being downgraded by

Donaldson Lufkin & Jenrette

.

The blue-chip index was also hampered by weakness in

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

, demonstrating the restraint of some tech investors.

Internet favorites were lately on the upswing, however, after overcoming some mid-morning hesitancy.

TheStreet.com Internet Sector

index was up 15 to 576.

The Russell 2000 was lately up 1 to 413 after falling as low as 410.44 early on.

No Surprise At Wheat First

While some market players were caught off guard by the market's sudden reversal yesterday, Don Hays, director of investment strategy at

Wheat First Union

, has been expecting a downturn for some time. Since turning decidedly defensive in mid-February, Hays has become increasingly suspicious.

"This is the season when flowers bloom and bull markets stall," Hays wrote in a report yesterday. "April is a big month for our market scenario, and as we enter the third week of the pivotal month, indeed the bullish vibes are still very evident, rejoicing the glad tidings of the first quarter. But as evidenced by the market action, market trends began to change substantially last week."

While other market watchers rejoiced at the broadening of interest away from the biggest market-cap growth stocks, Hays notes they have been the fuel in the S&P 500's rise. "As a result, our asset allocation model, as well as everyone else's, has been based upon the conditions of the S&P 500," he wrote. "That has produced the highest overvaluation of our model in the history of the U.S. stock market."

In a nutshell, Hays foresees large-cap growth stocks at the end of a classic "bull-bear" cycle similar to that experienced by Japan's

Nikkei

in the 1980s; emerging markets, which went from boom in 1993 to bust in 1997-1998; and small-caps, which peaked in third-quarter 1997 after a period of strong performance.

"The large-cap growth sector (including technology and Internets) is the last sector still in its old bull market," the veteran market watcher said. " Just looking at this sector we have all the attributes of a climax top that existed in Japan in 1989 -- record valuations, huge public participation and enthusiasm, parabolic price moves, growing selectivity and invincible bullish sentiment. All that is missing for this sector to begin a first bear phase is a trigger. We do not know yet what it will be, but it may not take much in the way of bad news when expectations are so high."

11 a.m.: Market Struggles as Stocks Fall From Session Highs

Rally or ambush? That's the question traders and investors were asking themselves this morning as tech stocks sought to revive themselves after

yesterday's thrashing. After an hour of trading, those long the market were beginning to look for booby traps as early gains evaporated.

As many players expected, investors initially forsake the recently torrid cyclical stocks for perceived bargains in techland. Drug makers were also recovering from their recent losses, while financials continued to exude strength thanks to strong earnings at

Chase

(CMB)

and a 3-for-2 stock split announcement by

Citigroup

(C) - Get Report

. But groups initially in favor slackened while the laggards weakened further.

The

Dow Jones Industrial Average

was fading as the morning progressed, lately down 50 to 10,390. Recent favorites

Chevron

(CHV)

and

United Technologies

were pacing the Dow's retreat. Cyclicals overall were recoiling from recent gains -- the

Morgan Stanley Cyclical Index

was down 2%.

Coming off one of its worst days in history, the

Nasdaq Composite Index

was the best performer of major indices in the early going, rising as high as 2379.90. But the tech-befuddled index was off its session highs, last up 5 to 2351.

Bellwethers such as

Dell

(DELL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

led the initial bounce, but were struggling to sustain the forward momentum. The

Nasdaq 100

was up fractionally.

Ahead of its profit report, due after the close,

Microsoft

(MSFT) - Get Report

was up fractionally. The software colossus is expected to post third-quarter profits of 32 cents a share vs. 25 cents a year ago, according to the 21-analyst consensus.

Internet stalwarts also hit a pothole on the comeback trail. With

America Online

(AOL)

and

Amazon.com

(AMZN) - Get Report

notably retreating from early gains,

TheStreet.com Internet Sector

index was down 8 to 523 after rising as high as 579.23 early on.

Elsehwere,

Inktomi

(INKT)

was up 15% and

DoubleClick

(DCLK)

was higher by 11%, after

Goldman Sachs

upped its recommendation on each to the recommended list from market outperform.

E*Trade

(EGRP)

was up 4 3/4 to 78 7/8 after posting a narrower-than-expected second-quarter loss.

But in the Net-stocks-are-still-dangerous category,

Network Associates

(NETA)

was down 32% after

last night posting a disappointing first-quarter earnings report and a dim outlook for the second quarter.

The

Russell 2000

was lately down 1 to 411.

10:00 a.m.: Stocks Mostly Higher After Monday's Collapse

The market's major barometers were mostly higher early on as technology and Internet stocks begin to bandage the heavy losses they suffered

yesterday while a flood of key earnings reports hit Wall Street.

The

Nasdaq Composite Index

was up 23 to 2369.

TheStreet.com Internet Sector

index was up 4 to 565.

The

Dow Jones Industrial Average

was down 13 to 10,428. The

S&P 500

was up 4 to 1294. The

Russell 2000

was up 2 to 414.

The 30-year Treasury bond was down 4/32 to 95 31/32, yielding 5.53%.

Philip Morris

(MO) - Get Report

recently posted first-quarter operating earnings of 80 cents a share, in line with the 12-analyst estimate. It was up 3/4 to 33 7/8.

Most Up at Open -- NYSE

Citigroup (C) - Get Report, up 3 1/4 to 73

: Citigroup set a 3-for-2 stock split.

Morgan Stanley Dean Witter

raised its 12-month price target on the stock to $87 from $79.

Most Up at Open -- Nasdaq

DoubleClick (DCLK) , up 9 5/8 to 113 5/8

:

Goldman Sachs

upgraded the company to its recommended list.

Most Down at Open -- NYSE

Telebras (TBH) , down 2 11/16 to 84 5/8

.

Most Down at Open -- Nasdaq

Go2Net (GNET) , down 10 1/4 to 136 1/2

.

--

Brian Louis