Today's Market: Stocks Turn Negative - TheStreet

(Updated from 9:38 a.m. EDT)

The gains were elusive. Out of the gate, the major market indices moved higher, but were lately slipping.

One trader early this morning said he thought opening gains wouldn't stick, saying early strength in futures was just follow-through from overseas markets. "I suspect that with pre-announcement season, institutional interest is more on the sell side at this point," said Elon Spar, senior trader at

Credit Suisse First Boston

. "Friday's rally wasn't very convincing. I see more chance of stocks closing down than up today."

Last Thursday and Friday saw the tech-heavy

Nasdaq Composite Index jump 3%, while the blue-chip

Dow Jones Industrial Average and the broader market

S&P 500 each rose 1%. Still, all three indices closed the week lower for the first time since early April. The Dow dipped 0.1%, the S&P 500 lost 1.4% and the Nasdaq shed 4.5% as investors geared up for pre-announcement season, when companies warn if profits or revenues will fall short of expectations.

The Nasdaq was recently down 6 to 2143. The Dow lost 36 to 10,954. And the S&P was slipping 2 to 1258.

Handheld computing outfit

Palm

(PALM)

was up 2.4% to $6.33 this morning after it said Friday that it plans to cut more jobs. But the company also said business is improving and named an ex-Gateway official as top executive.

Investors were pretty much brushing off a before-the-bell earnings warning from

Cypress Semiconductor

(CY) - Get Report

and a sour note on the chip industry from

Goldman Sachs

. After the

Semiconductor Industry Association

on Friday released global revenue data for April, Goldman analyst Terry Ragslade today wrote that Goldman expects another 20% decline in revenues sequentially in the second quarter, even if May and June turn out to be "normal-type months" compared to April. Warnings last week from

Altera

(ALTR) - Get Report

and

Integrated Device Technologies

(IDTI) - Get Report

, plus the April revenue data, "implies a downward bias for semiconductor news flow and stock prices near term," the note said.

Cypress was up 0.4% to $21.69.

Investors may be partly encouraged today by comments made over the weekend from

Federal Reserve Chairman

Alan Greenspan. Boosting the case for more interest rate cuts, Mr. G said inflation is "not a significant problem" for the U.S. economy. But he did add that the Fed remains vigilant for signs of inflationary pressure.

The Fed has already dropped short-term rates five times this year, slashing the benchmark rate to 4% from 6.5%. The policy-making body next meets to determine the direction of interest rates on June 26 and 27, and the

fed fund futures market-- a good proxy of how the bond market views the future direction of interest rates -- is pricing in about 90% odds there will be another quarter-point cut.

Earnings concerns should weigh on the market this week after

Sun Microsystems

(SUNW) - Get Report

warned last Tuesday it would miss its second quarter targets and kicked off the

second-quarter confession season.

Investors today will likely also continue trading on the upcoming

rebalancing of the

Russell 2000

, the index of small-cap stocks. The changes take effect July 1 and are based on stocks' closing prices on May 31.

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Treasury prices were rising this morning, with strength concentrated on the long end of the market.

The benchmark 10-year

Treasury note was lately up 6/32 to 97 13/32, while yields had slipped to 5.345%. Prices on the 30-year note were 13/32 higher to 95 20/32, as yields dropped to 5.681%.

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International

European stock markets were showing a bit of muscle in early trading this morning, though the market in Paris was closed. London's

FTSE 100

was gaining 0.75%, or 43.4 points, lead by strength in oil stocks. U.K. telecom equipment maker

Marconi

(MONI)

was rising 3.5% to $10.35 on an unconfirmed report that U.S. networker

Cisco

(CSCO) - Get Report

is interested in acquiring the company. Across the channel, Frankfurt's

Xetra Dax

was gaining 0.78%, or 44.77 points.

The euro, near six-month lows, was lately trading higher at $0.8513. The dollar was trading at 119.64 yen.

The major market averages in Asia ended moderately higher overnight. The

Nikkei 225

closed up 50.5 points to 13,312.35. Hong Kong's

Hang Seng

rose 66.11 points to 13,207.49.

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