Today's Market: Stocks End Mixed on Day One of Earnings Jamboree

<LI>Dow, Russell hang on.</LI> <LI>Internet stocks lower.</LI><LI>Alcoa rockets on strong earnings.</LI>
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Updated from 4:07 p.m. EDT

)

The market looked tired by the end of the session as the earlier earnings-inspired action lost steam. The

Dow Jones Industrial Average closed out the session clinging to 11.31 points, up 0.1%, to 10,647.29 after being up more than 60 points higher in mid-afternoon.

Meanwhile, the

Nasdaq Composite Index had a bumpy ride today, falling 42.62, or 1.1%, to 3950.58, after an unsuccessful attempt to claw its way past break even.

TheStreet.com Internet Sector

index also lost ground, down 23.09, or 2.9%, to 784.02.

The small-cap

Russell 2000 rose 2.59, or 0.5%, to 530.81 while the

S&P 500 surrendered its modest gains and ended off 3.23, or 0.2%, to 1475.67.

"I don't think anyone had a whole lot of conviction today," said Ray Hawkins, vice president of block trading at

J.P. Morgan

. "I think we are going to see more of this kind of emotion all week, a little bit of a lift and then the sellers come in," adding that with preannouncements out of the way and some decent earnings today, it kind of cleared the way for some sellers to come in.

Aluminum maker

Alcoa

(AA) - Get Report

put some shine on the Dow with a strong second-quarter

earnings report. The aluminum maker rose 2 1/16, or 7.5%%, to 29 11/16.

The report was welcome news after the gloom and doom of a round of earnings warnings last week. Other aluminum stocks, and basic material stocks in general, were getting polished up after Alcoa's report.

Alcan Aluminum

(AL) - Get Report

edged up 1.3%.

With the market's focus turning to what is expected to be a pretty bullish earnings season, there appears to be a lot less concern about the Fed's plans at its August meeting.

"The

Fed is going to take a back seat," said Peter Boockvar, equity strategist at

Miller Tabak

, noting that the

fed funds futures are indicating less than a 50% chance of a fresh rate hike at the

Federal Open Market Committee's Aug. 22 meeting. "The market will focus on earnings -- Alcoa kicked it off today with a better-than-expected number."

Retail stocks were also doing some heavy lifting with the

S&P Retail Index

gaining 1.6%.

Circuit City

(CC) - Get Report

rose 8.6%, while

Gap

(GPS) - Get Report

gained 6.7%.

Home Depot

(HD) - Get Report

helped out the Dow, rising 4.1%, and accounting for more than 13 points of upside on the blue chip measure.

Brokerage stocks were also doing brisk business with

Merrill Lynch

(MER)

ringing up an all-time high, up 2 15/16 to 126 3/16. The

American Stock Exchange Broker/Dealer Index

rose 1.9%.

High Tide?

But while folks are feeling fairly positive about earnings season, it won't necessarily be the tide that lifts all boats this time around. With the business environment getting a bit tougher, companies with spottier business models and less seasoned management may run into trouble, said Tony Cecin, manager of Nasdaq trading at

U.S. Bancorp Piper Jaffray

.

"It's going to be very stock-oriented as opposed to stock-market-oriented," he explained. "It's going to be important to own the right stocks in the right sectors. Money managers are going to be challenged to be in the right stocks, not just the right sectors."

JDS Uniphase Puts a Hurt on the Nasdaq

Canadian fiber-optics group

JDS Uniphase

(JDSU)

was a major drag on the Nasdaq after it announced plans to

buy rival

SDL

(SDLI)

for $41 billion in stock, a nearly 50% premium over SDL's stock price Friday.

JDS finished its purchase of another fiber-optics firm,

E-Tek Dynamics

, for $15 billion at the end of last month.

JDS tumbled 15 1/16, or 13%, to 101 1/8, reducing the announced value of the deal, while SDL soared 25 3/8, or 8.6%, to 320 11/16 on heavy volume. "It's been a wild day in both of those names," said Cecin.

Though the moon is not full, an item in the

Drudge Report

appeared to be having an effect on the market. According to Matt Drudge,

Disney

(DIS) - Get Report

is in talks to merge with

Apple

(AAPL) - Get Report

and

Pixar

(PIXR)

. Pixar head and Apple CEO Steve Jobs would then take the helm at Disney. Pixar was up earlier but slipped 0.7% by the end of the session. Apple added 4.9%, while Disney was fractionally higher.

A Pixar sale, at least, makes some sense -- the company is regularly rumored to be on the block, with Disney being an obvious buyer. But it's hard to imagine what kind of (excuse the term)

synergies

exist between Disney and Apple. Though the

Mickey Mouse Mouse

does sound somewhat promising...

Market Internals

Breadth was mixed on moderate volume.

New York Stock Exchange: 1,598 advancers, 1,245 decliners, 819 million shares. 96 new 52-week highs, 26 new lows.

Nasdaq Stock Market: 1,946 advancers, 2,104 decliners, 1.36 billion shares. 102 new highs, 68 new lows.

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Most Active Stocks

NYSE Most Actives

  • AT&T (T) - Get Report: 14.4 million shares.
  • Compaq (CPQ) : 13.7 million shares.
  • Motorola (MOT) : 12.2 million shares.

Nasdaq Most Actives

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Sector Watch

Semiconductor equipment makers were doing well.

Semicon West

-- the year's major tradeshow for the group -- kicks off today in San Francisco, and there's been good buying in expectation of the usual flurry of announcements.

Novellus

(NVLS)

was the best performer in the group. The company gave analysts a taste of what it will be unveiling at the show (its new low-k dielectric deposition tool, dubbed VECTOR, some new physical vapor deposition tools and its second-generation of CORAL low-k films, if you must know). Shares of Novellus were up 1.8%.

Industry heavyweight

Applied Materials

(AMAT) - Get Report

was up 1.1%.

KLA-Tencor

(KLAC) - Get Report

was up 1.6%. And

Credence Systems

(CMOS)

was up 5.1% -- benefiting greatly from an initiation at outperform from

Morgan Stanley Dean Witter

.

Cyclical stocks were seeing some upside. The

Morgan Stanley Cyclical Index

climbed 1.4%

"The cyclical stocks have been really beat up," noted Boockvar, on the assumption that they will suffer the worst as the economy slows. Boockvar reckoned that Alcoa's good earnings were injecting a little optimism into the sector.

Caterpillar

(CAT) - Get Report

,

DuPont

(DD) - Get Report

,

International Paper

(IP) - Get Report

and

3M

(MMM) - Get Report

all moved higher.

Plagued with near-daily earning warnings, software stocks continue to trade poorly.

Today's disaster was

TenFold

(TENF)

, an e-business software provider, which said it would lose 3 cents to 5 cents in the second quarter. Analysts were expecting it to make 9 cents a share, according to

First Call/Thomson Financial

. TenFold was looking a bit more like FiveFold after that bit of news -- its shares tumbled 39.9%.

Sympathy pains were racing through the sector.

Oracle

(ORCL) - Get Report

lost 2.3%.

Computer Sciences

(CSC)

was off 1.4%.

Computer Associates

(CA) - Get Report

, which warned pretty memorably last week, fell 3.6%.

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Bonds/Economy

Treasuries surrendered

Friday's gains on little news. But while the economic calendar is bare for the day, bond market participants were anticipating heavy issuance of investment-grade corporate bonds this week, which can drive Treasuries lower as investors sell them in order to buy new corporate bonds.

At least $10 billion of new investment-grade corporate bonds are expected to be issued this week, compared to a four-week average of $7.7 billion, said John Atkins, market analyst at

IDEAglobal.com

. Bond-market-friendly economic news last week -- the

Purchasing Managers' Index

and the

employment report

in particular -- "opened the door" to the issuance flood, Atkins said.

The benchmark 10-year Treasury note was down 4/32 to 103 12/32 to yield 6.030%.

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International

Major European markets were soft, despite a solid Friday rally in the U.S. on the friendly jobs report.

London's

FTSE

finished down 31.3, or 0.5% to 6466.2. Index heavyweight

Vodafone AirTouch

(VOD) - Get Report

was a major drag on the Footsie. Drugmakers

SmithKline Beecham

(SBH) - Get Report

and

Glaxo Wellcome

(GLX)

were also major contributors on the downside.

Paris'

CAC

closed down 78.55, or 1.2% to 6487.42.

Frankfurt's

Xetra Dax

ascended 18.6 to 7070.82.

The euro was lately trading at $0.9543.

Asian markets fared exceptionally well overnight as investors bought back key tech shares they had been selling off the past few months.

Hong Kong's

Hang Seng

index closed above 17,000 for the first time in more than three months, ending up 408.71 points at 17,238.67.

The

Group of Seven

finance ministers' meeting held over the weekend in Japan delivered little in substance, but with the late-July G8 summit (dubbed the Information Technology summit) coming up, some traders said the overabundance of IT-related headlines actually may have helped sentiment in the Tokyo tech sector Monday.

The

Nikkei 225

index rose 174.44, or 1.0%, to 17,572.68.

The greenback was lately at 107.1 yen.

Korea's

Kospi

index climbed 9.73, or 1.2%, to 851.47, despite the possibility of an imminent banking sector strike. Bankers are not pleased with the government's recent proposals on banking sector reforms.

Elsewhere in Asia, Taiwan's

TWSE

index fell 18.41 to 8154.67.

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