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Today's Market: Stocks Bounce in Early Action, but Oil Could Interfere

<LI>Alcoa trading down on profit warning.</LI> <LI>Housing starts lower than expected.</LI>

(Updated from 9:27 a.m.)

The way the major indices have been beaten up in the past few days, some stocks are probably looking pretty cheap. Early action indicates that Wall Streeters are ready to throw their cash back at the market at the open.

But without any good news to support it, and with plenty of oil and euro threats left, an early bounce this morning could sputter.

Between Friday and Monday's action, the

Nasdaq Composite Index plummeted 187 to 3727, while the

Dow Jones Industrial Average gave up 279 to 10,809.

"I think the market is generally at a very good level, technically. I would think we are near a pullback," said Steven Goldman, market strategist at

Weeden

. "The problem is, there's an element of risk. Oil markets -- dependency on Iraq -- that makes it unclear. So we're on heightened alert," he said.

The

Dow Jones Industrial Average moved up 17 in early action to 10,826. The

Nasdaq Composite Index jumped 34 to 3760. And the

S&P 500 moved 4 higher to 1448.

With earnings pre-announcement season upon us, the combination of a slowing economy, rising fuel prices, a depressed euro and concerns over declining demand for semiconductors and PCs has created a veritable battlefield for stocks in recent action. The pre-announcement season kicked off last week and should last until the end of September, and investors have been quick to punish companies that warn of earnings weakness.

Tech bellwether

IBM

(IBM) - Get Report

was slipping in early action, and

Intel

(INTC) - Get Report

was rising 2.4%. Both slid precipitously yesterday. Despite some bullish comments on the sector yesterday, the semiconductors were unable to hold on to early robust gains, giving them up just before the close.

Whether or not oil prices can continue at current levels remains a big question. Tensions in the Middle East helped to push prices up further Friday, but they were off just slightly overnight. Today after the close, U.S. oil drillers will report on stocks' levels.

TheStreet.com

has been following the oil saga. Our most

recent story on it ran yesterday.

Dow component

Alcoa

(AA) - Get Report

will likely be today's first victim. The company issued a profit warning Monday after the close, citing higher energy costs and softening markets. Shares of the aluminum manufacturer traded down 1.9% in early action.

TheStreet.com

wrote about Alcoa in a

separate article. Despite the news,

Merrill Lynch

reaffirmed its buy rating on the stock this morning, saying the stock is significantly undervalued at current prices.

Diversified manufacturer

Ingersoll-Rand

(IR) - Get Report

also warned that it sees lower-than-expected 2000 results due to a weaker euro and slower demand for infrastructure-related equipment. The company's shares were lower in off-hours action. The stock wasn't trading yet this morning.

FedEx

(FDX) - Get Report

may be the next to fall prey to oil woes. The company reports third-quarter earnings today. Higher fuel prices are a huge component of the global shipping company's costs. The euro should not do too much damage, though, since the company operates only a small portion of its business in Europe. FedEx was up 2% in early trading.

Elsewhere in the news,

Rockwell International

(ROK) - Get Report

may get another beating today after being downgraded by

TST Recommends

ING Barings

this morning to hold from buy. Yesterday, investors shed the stock after the company warned about missing earnings estimates. Rockwell was 1.4% lower in early going.

In drugs,

Human Genome Sciences

(HGSI)

announced a 2-for-1 split of its common stock. Elsewhere in the sector,

Protein Design Labs

(PDLI) - Get Report

said after the close yesterday that it has signed its second deal this month with drug giant

Eli Lilly

(LLY) - Get Report

. The stock was trading higher in off-hours action after tumbling Monday. Human Genome was up 4.2% in early trading. Protein Design was up 6.7%.

Meanwhile, August

housing starts bring neither damage nor repair to today's markets. Housing starts came in at 1.531 million units, just under expectations of 1.535 million units. The news simply reconfirmed what is already well priced into the market, that the economy is slowing down.

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Bonds/Economy

The 10-year Treasury note was lately down 1/32 at 99 2/32, yielding 5.877%.

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International

European markets were narrowly mixed near the break-even point at midday, and Frankfurt stocks had turned just barely into the green .

The

FTSE 100

was down 6399.50 to 6389.60.

Across the channel, the

CAC 40

in Paris was down 2.86 to 6519.52, and the

Xetra Dax

in Frankfurt was up 9.55 to 6901.24.

The

embattled euro was lately trading a hair higher at $0.8543.

Asian markets traded higher overnight.

A late-day rally in selected technology shares helped nudge key Japanese indices a hair higher today. But the buying continued to be countered by selling from institutional investors that shed blue-chips ahead of book closings for the fiscal first half.

The

Nikkei 225

index rose 63.03 to close at 16,124.19.

Hong Kong's

Hang Seng

index rose 117.04 to close at 15,677.20, reversing the ugly 4% drop recorded yesterday. A bout of short-covering in the futures market, along with property shares rallying helped sentiment today.

Cheung Kong

rose HK$2.50, or 2.7%, to 94.25 ($12.09), while

Sun Hung Kai Properties

climbed 2.25, or 3.5%, to 66.75.

Korea's

Kospi

index declined for the ninth straight session, closing down 6.39, or 1.1%, at 571.17. Investors are still fleeing the market on worries over slowing corporate restructuring. Taiwan's

TWSE

index also fell 175.24, or 2.5%, to end at 6734.90.

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