(Updated from 10:02 a.m.)

In the wake of Monday's

high-octane rally on the

Nasdaq Composite Index and a strong four-day run-up in the blue-chip

Dow Jones Industrial Average, Wall Street was taking tech stocks for a ride. The Dow has stayed negative this morning.

The Nasdaq was lately up about 5 points to 2311; the Dow was down some 50 points to 11,289; and the broader

S&P 500 was down about 2 points to 1311.

The tech-heavy Nasdaq soared yesterday to close above 2250 -- a recent "resistance" level, or point at which technical analysts expected it to meet selling pressure. The Dow, which broke through its own

resistance level of 11,000 last Wednesday, tacked on more moderate gains yesterday.

There was little news driving Monday's rally, so some market pros worry that short-covering -- when investors purchase stock that has been

shorted (or borrowed with the intention of selling it back later at a lower price) -- contributed to the run-up. If it did, buying might evaporate quickly. But volume was strong -- a bullish indicator, because it suggests a high level of conviction in the rally. And volatility was low, which is also a bullish indicator. The Nasdaq volatility index yesterday dropped to 52.97, just above its 52-week low, according to derivatives trading outfit

Fuji Futures


Brian Finnerty, head of trading at

C.E. Unterberg Towbin

, also noted that recent success in the IPO market is a very bullish sign for the market. "It shows that investors are willing to take a risk on the market."

A host of tech names were moving higher in early trading. Handheld-device maker



was climbing this morning. The stock rebounded yesterday after falling Friday on a revenue warning. It was lately up 12.3% to $6.68. Fiber-optic outfit


(CIEN) - Get Report

was gaining 7.9% to $65.57. And portal giant



was up 2.7% to $22.09.

Retail stocks should take center stage again today. Several big retailers report earnings today in a heavy earnings week for the sector.



this morning reported first-quarter earnings that were flat year-over-year and said it sees no growth in the second quarter.


(TGT) - Get Report



(KSS) - Get Report

also report today. Staples was up 3.7% to $16.09 so far today; Target was up 2.8% to $38.79; and Kohl's was up 0.8% to $67.50.

Recent economic data has shown signs of strength in retail sales, and the sector's stocks have risen steadily in April and May. Lower interest rates are supposed to be good for retailers, because they make it cheaper for consumers to borrow and spend.


Federal Reserve's fifth interest-rate reduction last Tuesday seems to have reignited bulls' faith in an economic and profits recovery later this year or early next year. The first rate cut in this series came on Jan. 3, and it typically takes at least six months for lower rates to work their way through the economy.

It can't hurt that U.S. Treasury Secretary Paul O'Neill said the downturn in the U.S. economy is over and that recovery should come later this year. O'Neill credited the Fed's aggressive interest-rate cutting for the supposed turnaround.

The market's faith in a rebound may be tested, however, as earnings news continues to trickle onto Wall Street and investors await word on corporate outlooks. The second-quarter preannouncement season -- when companies let the market know if they don't expect to meet their performance targets -- is quietly getting started.

The economic calendar yields nothing new until Friday's preliminary first-quarter

Gross Domestic Product

and the April

durable goods orders


European markets were climbing steadily, while Asian stocks were mixed overnight. There were losses in Tokyo and three-digit gains in Hong Kong. Losses in


helped to stamp out an early rally in Tokyo that had been inspired by yesterday's rally in the U.S. Bridgestone fell after its U.S. subsidiary,


(FV) - Get Report

, announced it was ending a 95-year relationship as supplier to


(F) - Get Report

. Ford was off 3% to $25.84 this morning.

Since hitting a recent low of 1638.80 on April 4, the Nasdaq is up 40.6%. But it's still down 6.7% for the year and 53.4% off its all-time high. The blue-chip Dow is up 20.8%, off its two-year low of 9389.48 hit on March 22. It is ahead 5.1% for the year.

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In a reversal of yesterday's action, Treasury prices were weaker at the longer end of the Treasury market this morning. Benchmark 10-year

Treasury note prices were up 2/32 to 97 5/32, while yields had edged down to 5.378%.

The 30-year note prices were down 9/32 to 94 16/32, as yields rose to 5.762%.

Treasury prices had inched higher Monday, with gains also concentrated in the long bond.

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Europe's major indices were tacking on moderate gains this morning. Led by gains in technology, media and telecom stocks, London's

FTSE 100

was lately up 38.7 to 5980.3. Across the channel, the Paris


was up 66.26 to 5718.30, while Frankfurt's

Xetra Dax

was rising 75.46 to 6325.33.

Asian stocks closed mixed overnight. Tokyo's key

Nikkei 225

closed off 85.6 to 14091.19. Losses in


helped to stamp out an early rally in Tokyo that had been inspired by yesterday's rally in the U.S. Bridgestone fell after its U.S. subsidiary,


(FV) - Get Report

, announced it was ending its 95-year relationship as supplier to


(F) - Get Report

. Hong Kong's

Hang Seng

rose 156.68 points to 13,877.95.

Except for some intermittent selling, the European and Asian indices have been rising steadily since hitting 18-month lows in March.

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