Stocks haven't been able to muster any enthusiasm today as major indices surrendered to selling pressure. Another bout of earnings warnings, and especially a high profile tech company, kept a cloud of worry hanging over the market today.

The

Nasdaq Composite Index and

Dow Jones Industrial Average spent minimal amounts of time in the green this morning before both slipped into the red.

Amid a number of concerns currently weighing on the market -- the largest of which is the upcoming earnings season -- it didn't take much for yesterday's modest gains to evaporate. "I'm not quite sure yesterday's rally is to be believed. Internals were still showing selling," said Pat Dwyer, head of institutional sales at

Cantor Fitzgerald

, noting yesterday's negative breadth, particularly on the Nasdaq.

The number of declining stocks was 2,140 as compared with 1,874 advancing stocks on the Nasdaq. A dismal 281 stocks hit new lows while a mere 35 stocks scored new highs.

Dwyer said he thinks the Nasdaq needs to test the lows of the year before it can put in a bottom, referring to the May 24 intraday low of 3042. "The Composite went from 5000 to 3000 and then we had a 50% retracement off the low. We need to retest those lows before we can put in a bottom."

Another troubling sign for Dwyer is the low level of the

Chicago Board Options Exchange Volatility Index

, or VIX, which he says he watches carefully. Traders use the volatility index to gauge the market's anxiety level. The VIX rises when put option buying increases on options on the

S&P 100

, or OEX. A put option gives the purchaser the right but not the obligation to sell a security for a specified price at a certain time. For contrarians, low readings on the VIX are bearish, while high readings are bullish. During the April selloff, the VIX spiked as high as 41.53.

The low level "signals complacency in the marketplace. You need volatility to expand and a very heavy volume day or two on the downside to put the bottom," in this market, said Dwyer.

If the parade of earnings warnings from high profile companies continues the same way, that visit to the bottom could happen soon.

Dell

(DELL) - Get Report

became the latest company to join the line-up of techs warning about a shortfall in third-quarter earnings.

Dell was lately down 8.7%, after saying last night that slower sales growth could dent profits in the third and fourth quarters. See

coverage from

TheStreet.com

for more details. Other box makers were feeling the pain with

Gateway

(GTW)

sliding 6.5% and

Compaq

(CPQ)

off 9.5%.

In a sign of just how jittery the market is lately, even the stocks with good news are getting socked. Take

Micron Technology

(MU) - Get Report

, which handily beat fourth-quarter estimates last night. Today

ABN Amro

cut its price target on the stock to 100 from 120, saying semiconductor chip prices are bottoming out at lower levels.

Lehman Brothers

and

Sanford Bernstein

stood by their ratings and price targets but investors were only focusing on the bad news. Micron was lately off 10.8%, along with more modest weakness in the chip sector.

"It's really not a good-looking market," said Ricky Harrington, chief technical analyst at

Wachovia Securities

in Charlotte, N.C. "The Nasdaq is down 20% in the last 23 days or so. One stock after another responds negatively to any kind of news it seems. We're now entering the peak period for earnings and have to very cautious," he said, adding he thinks there has been an increase in pessimism.

"Any rally will be one to two days in duration but it will probably be disappointing. There has been a slight shift to more pessimism but not nearly enough to warrant thinking we are nearing the end of this correction," said Harrington.

The Dow was a mixed bag today with some defensive issues such as

Procter & Gamble

(PG) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

showing strength. The consumer products sector got a boost from an upgrade by

Merrill Lynch

analyst Heather Murren on several bellwether stocks.

Retail stocks were hanging near breakeven after several disappointing same-store sales reports from companies including

Gap

(GPS) - Get Report

and

J.C. Penney

(JCP) - Get Report

.

Market Internals

Breadth was negative, particularly on the Nasdaq on moderately heavy volume.

New York Stock Exchange: 1,162 advancers, 1,420 decliners, 632 million shares. 36 new 52-week highs, 45 new lows.

Nasdaq Stock Market: 1,508 advancers, 2,064 decliners, 946.4 million shares. 35 new highs, 136 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent (LU) : 17.1 million shares.
  • America Online (AOL) : 14.6 million shares.
  • TNPC (NPW) : 14.9 million shares.

Nasdaq Most Actives

  • Dell : 77.9 million shares.
  • Intel : 27 million shares.
  • Worldcom (WCOM) : 25.7 million shares.

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Sector Watch

Weakness in Dell was spreading to the rest of the PC maker sector as The

Philadelphia Stock Exchange Computer Box Maker Index

tumbled 4.6%.

Concerns about chip prices weighed on Micron and the broader chip sector, with the

Philadelphia Stock Exchange Semiconductor Index

off 2.4%.

Oil and gas stocks were under pressure after a dip in oil prices when U.S. energy firms snapped up the national reserves offered by the government. The

American Stock Exchange Oil & Gas Index

was down 1.3% while the

Philadelphia Stock Exchange Oil Service Index

was off 1.7%.

Meanwhile transports and airline stocks got a lift on the news with the

Dow Jones Transportation Index

up 0.7% and the

American Stock Exchange Airline Index

up 2.1%

The

S&P Retail Index

was slightly lower, after mixed reports on same-store sales.

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Bonds/Economy

Treasuries are little changed on little news on the day before the release of the September

employment report, the most important economic report to roll around each month.

There are no major economic reports today, although at 2 p.m. EDT the

Federal Open Market Committee will release the minutes of its Aug. 22 meeting.

At its most recent meeting on Tuesday, the FOMC

cited the still-high level of labor-force utilization -- a.k.a. low unemployment rates -- as its main reason for maintaining its aggressive posture on interest rates.

The employment report will provide the latest readings on unemployment, with possible implications for monetary policy. In August, the regular unemployment rate stood at 4.1% and the

augmented unemployment rate -- the measure preferred by the Fed -- stood at 6.9%.

The benchmark 10-year

Treasury note lately was up 2/32 to 98 31/32, to yield 5.888%.

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International

European stocks pulled back following a

surprise interest rate hike from the European Central Bank this morning, though most indices remained in the green.

Reuters

survey of economists showed that 34 of 48 had expected the ECB to keep interest rates unchanged at its meeting this week. Earlier, equity prices remained stable after the

Bank of England

left Britain's interest rates unchanged at 6%.

A weaker outlook for the U.S. market was also putting pressure on European markets.

In London, the

FTSE 100

was lately up 22.30 to 6357.20.

Across the channel, the

CAC 40

in Paris was up 10.87 to 6307.00, while the

Xetra Dax

in Frankfurt was up 14.73 to 6838.16.

The euro was squeezing out some slim gains, lately up to 0.8782.

TheStreet.com

recently looked at what

ails the euro.

Heartened by the Nasdaq's recovery, most of

Asia's major stock markets ended in positive territory Thursday.

Japan was the major exception, as the

Nikkei 225

closed down 49.8, or 0.3%, at 16,099.3. Dell's earnings warning weighed on the shares of

Sony

(SNE) - Get Report

and

NEC

(NIPNY)

.

In Tokyo currency trading, the dollar rose against the yen to 109.40 yen from 108.74 yen Wednesday. It was lately trading at 109.27.

Other Asian markets were lifted by buoyant technology shares following the Nasdaq's rebound. Hong Kong's

Hang Seng

index rose 305.8, or 1.9%, to finish at 16,184.7; Taiwan's

TWSE

index rose 31.7, or 0.5%, to end at 6029.7; and South Korea's

Kospi

index closed up 8.4 points, or 1.4%, to 606.8, despite a surprise move by the central bank to hike interest rates by 25 basis points to 5.25%.

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