(Updated from 9:40a.m.)

Following last week's wretched end to a miserable month for stocks, investors were looking for a fresh start and a few good bargains this morning. Almost everything, particularly tech, took a serious beating last month.

With earnings warning season winding down,

Caterpillar's

(CAT) - Get Report

warning Friday was putting pressure on the

Dow Jones Industrial Average. Tech initially got some spring in its step from

Banc of America's

call on the PC sector. Banc of America said this morning that, following the stock sell-off on Friday prompted by

Apple's

(AAPL) - Get Report

earlier warning, all the bad news is priced in.

But after opening higher, the major indices were lately in the red. The Dow lately was losing 12 to 10,638. The

Nasdaq Composite Index was 6 lower to 3667. And the

S&P 500 moved fractionally higher to 1437.

Caterpillar was lately trading 5.9% higher compared to its composite close. But it was 94 cents lower compared to its closing price on Friday on the New York Stock Exchange.

"It's a new quarter, so new positions are being established. There's a feeling out there that you want to participate on these downswings as buying opportunity. It's a positive signal that in spite of what Caterpillar preannounced, things are up," said Peter Coolidge, managing director of trading at

Brean Murray Foster Securities.

"We're really in quiet period. We're not going to get third-quarter earnings for a week, and we're basically past pre-announcements season. Energy prices remain a concern. The good news is, there seems to be a rotation. At least money is not fully leaving the market," he added.

But the trend of a lot of green both before and at the open has become a familiar scene. It's hard to say whether early upside will hold.

"We had a pretty rough week last week," Coolidge said. "But we've seen this kind of strength in the morning before. It's to be determined in the afternoon whether an early day rally can hold or not."

Technology bellwethers were mixed this morning after last week's wreckage.

Apple

(AAPL) - Get Report

,

Intel

(INTC) - Get Report

,

Cisco

(CSCO) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

were rising this morning after being ploughed into the ground Friday. Apple was one of the most recent in a string of high-profile companies to warn of earnings shortfalls for third quarter. It lost half its market value during the trading session Friday. Apple was lately 0.5% higher. Intel was losing 0.5%. Cisco was up 4%. And Sun was losing 1.1%%.

Intel was lower on news it had canceled plans for a new low-cost computer chip and reportedly expects to delay the introduction of its next-generation processor, the Pentium IV. That doesn't bode well for the company or the industry at a time when Wall Street is worried about slowing PC and chip demand. Investors have been hacking away at Intel's share price since the company warned of an earnings shortfall in mid-September.

TheStreet.com

wrote Friday about the plans to

cancel the cheap chip.

There were more bad warnings than good warnings on the earnings front.

Energy company

Dynegy

(DYN)

this morning said it expects to beat earnings per share estimates for the third quarter, with 55 cents vs.

First Call's

50 cent forecast. But plastic and resins supplier

Schulman

(SHLM) - Get Report

announced it expects fourth-quarter earnings to miss analyst estimates by a full 50%. Schulman blamed the shortfall on higher plastic feedstock costs and a weaker euro.

And Internet access products

Ramp Networks

(RAMP) - Get Report

said it expected to report a much wider loss than estimated by analysts -- between 50 cents and 53 cents vs. an average 30 cent loss forecast by analysts polled by First Call. Ramp was losing 32.7% in early action.

Meanwhile, watch for action in

Walgreen

(WAG)

, which posts fourth-quarter earnings today. In September, the retailer announced a 12% increase in same store sales for the month of August. Walgreen was lately 1.3% lower.

Downgrades this morning on two Dow components -- airplane manufacturer

Boeing

(BA) - Get Report

and construction and mining equipment firm Caterpillar certainly won't help the blue-chip index.

Lehman Brothers

downgraded Boeing to neutral after the company lost an important contract to Airbus in Singapore.

PaineWebber

, meanwhile, downgraded Caterpillar following the company's

earnings warning late Friday, when it said it expected to miss third-quarter earnings consensus forecasts by around 15%. Its shares were taking a hit this morning in preopen action. Boeing was lately off 7.1%.

On the economic front, September's

Purchasing Manger's Index came in this morning at 49.9 versus a forecast for a reading of 50.0 and last month's 49.5. A PMI above 50 signals expansion, while a reading below 50 indicates contraction.

The

Federal Open Market Committee meets tomorrow, but investors don't think

Alan Greenspan

& Co. will do anything to interest rates, and few think they will change their "bias" on the economy. These days, earnings are what really matter.

In merger news,

FleetBoston

(FBF)

agreed to buy

Summit

for $7 billion in stock, giving it New Jersey's No. 1 market share. That's a more than 40% premium to its price before the rumors Tuesday and news Wednesday that they were in talks pushed Summit's shares to new levels.

TheStreet.com

wrote about the deal in a

separate story.

And merger mania in the power sector continues, with

Northwestern

(NOR)

power company announced plans to buy

Montana Power's

(MTP) - Get Report

energy distribution unit.

ASM Lithography

(ASML) - Get Report

agreed to buy one of its biggest rivals,

Silicon Valley Group

for $1.6 billion in stock, creating the leading provider of lithography equipment. Lithography projection systems are essential to the fabrication of integrated circuits made by the chip industry.

Elsewhere in market-moving news,

Ford

(F) - Get Report

cut the price of most of its models sold in Britain by 5% to 13%, the company said. The company decided to cut prices in order to encourage more retail buying in the U.K. and stabilize sales there.

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Bonds/Economy

The benchmark 10-year Treasury note was lately down 8/32 to 99 11/32, and yielding 5.839%.

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International

European markets were higher at midsession.

In London, the

FTSE 100

was up 50.90 to 6345.10.

Across the channel, the

CAC 40

in Paris was 80.54 higher to 6347.17. The

Xetra Dax

in Frankfurt gained 76.07 to 6874.19.

After voters in Denmark decided not to join the euro last week, the single currency was trading lower at 0.8801.

Asia's major markets continued to feel pressure Monday from last week's Apple-inspired tech shakeout, but Japan's

Nikkei 225

was able to erase early losses to finish in the plus column.

The Nikkei was able to close up 155.3 points, or 1%, at 15,902.5, after being down over 1% earlier in the session.

In Tokyo currency trading, the dollar was little changed at 108.17 yen. The greenback was lately trading higher at 108.51 yen.

Hong Kong's equity markets were closed for a holiday Monday, but South Korea's

Kospi

index tanked 24.0 points, or nearly 4%, to 589.2, as technology shares tumbled. Taiwan's

TWSE

index finished down 2.6% at 6,024.1, even though the government pledged 500 billion Taiwanese dollars ($16 billion) to stabilize the market if necessary.

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