Stocks Fall From Session Highs as Initial Earnings Euphoria Dissipates

A drop in tech stocks has pushed the Nasdaq into negative territory.
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Following an earnings-fueled liftoff at the opening bell, stock proxies have since cooled their jets, most notably tech-focused averages. An overall positive tone remains in place, but the explosiveness of the initial move has mellowed noticeably, at least for now.

The

Dow Jones Industrial Average

was up 78 to 10,796, but down from its initial best of 10,820.25. Similarly, the

S&P 500

was higher by 4 to 1364 after rising as high as 1371.67 early on. Both averages are currently on pace to best previous record highs.

But the

Nasdaq Composite Index

, which rose as high as 2677.76 in the early going, was lately down 13 to 2639. Also,

TheStreet.com Internet Sector

index, which climbed as high as 731.49, was lately down 12 to 703.

Much of the impetus for the early morning rise came from better-than-expected earnings posted last night and this morning, plus the anticipation of more to come after the bell today and later in the week.

eBay

(EBAY) - Get Report

generated great excitement

last night when it posted first-quarter earnings of a nickel a share, 3 cents ahead of the 10-analyst consensus. But eBay, which rose as high as 234 this morning after closing at 209 yesterday, was lately up "just" 6% at 221.

America Online

(AOL)

was down 2% ahead of its highly anticipated earnings report, due after the close today. The 34-analyst consensus estimate for AOL is 9 cents a share vs. 4 cents a year ago. (

TheStreet.com

previewed AOL's earnings in a

story this morning.)

Elswhere in the group,

Doubleclick

(DCLK)

was down 10% after committing the unpardonable sin of merely matching the seven-analyst expectation. The company reported a first-quarter loss of 13 cents vs. a loss of 21 cents a year ago.

Traditional tech bellwethers were faring about the same as their Internet counterparts. Stalwarts such as

Microsoft

(MSFT) - Get Report

,

Dell

(DELL) - Get Report

and

Cisco

(CSCO) - Get Report

were weakening this morning; the

Nasdaq 100

was down 1%.

On the blue-chip front,

AT&T

(T) - Get Report

was up just 1% despite posting first-quarter operating earnings of 61 cents a share, including the impact of the March 9

TCI

acquisition. The 18-analyst estimate predicted earnings of 57 cents.

Meanwhile,

Disney

(DIS) - Get Report

was down 4% after posting second-quarter earnings of 13 cents a share, in line with the 19-analyst estimate but down from the year-ago 18 cents.

IBM

(IBM) - Get Report

was again among the Dow's best performers, up 1% after announcing plans to repurchase up to $3.5 billion in stock. Big Blue also raised its dividend by 9%.

Moreover, the Dow was being fueled by cyclical stocks such as

Caterpillar

(CAT) - Get Report

and

Chevron

(CHV)

. The

Morgan Stanley Cyclical Index

was up 1%. If those gains hold (or expand) and tech continues to falter today, look for market pundits to talk about another rotation into basic materials.

Among stocks on the move for non-earnings-related news,

Park Place Entertainment

(PPE)

was up 15% on word it is buying

Caesars World

and other gaming assets from

Starwood Hotels & Resorts Worldwide

(HOT)

for about $3 billion in cash. Starwood was recently down 3%.

The

Russell 2000

was up fractionally at 435 as market internals remain favorable.

In

New York Stock Exchange

trading, advancers were leading declining stocks 1,539 to 1,014 on 264 million shares. In

Nasdaq Stock Market

activity, gainers were leading 1,647 to 1,554 on 361 million shares.

The price of the 30-year Treasury bond was lately up 9 to 95 18/32, its yield falling to 5.56%.

10:04 a.m.: AT&T, eBay Earnings Jumpstart Stocks

Better-than-expected earnings from

eBay

(EBAY) - Get Report

and

AT&T

(T) - Get Report

helped in part lift major market averages early on.

AT&T, a Dow component, was up 1 7/16 to 54 3/8.

The

Dow Jones Industrial Average

was up 79 to 10,798.

The

S&P 500

was up 9 to 1369. The

Nasdaq Composite Index

was up 20 to 2672. The

Russell 2000

was up 2 to 437.

TheStreet.com Internet Sector

index was up 8 to 722.

The 30-year Treasury bond was up 4/32 to 95 12/32, yielding 5.57%.

Most Up at Open -- NYSE

Vodafone (VOD) - Get Report, up 3 3/16 to 187 13/16

.

Most Up at Open -- Nasdaq

eBay (EBAY) - Get Report, up 24 7/8 to 233 7/8

: After the close, the company posted first-quarter earnings of 5 cents a share, 3 cents ahead of the 10-analyst

First Call

forecast and above the year-ago penny.

Most Down at Open -- NYSE

Campbell Soup (CPB) - Get Report, down 1 7/16 to 41 1/2

:

Donaldson Lufkin & Jenrette

downgraded Campbell Soup to market perform from buy.

Most Down at Open -- Nasdaq

DoubleClick (DCLK) , down 22 5/8 to 149

: The company reported an operating loss of 13 cents a share, in line with the First Call 10-analyst estimate but narrower than the year-ago loss of 21 cents.

--

Brian Louis