Tuesday: Techs Sputter Despite Strong Chip Profit

By John J. Edwards III
Staff Reporter

The tech rally, such as it was, seems to have run out of steam just when a couple of strong earnings reports were supposed to have powered it onward.

After the close yesterday,

Motorola

(MOT)

and

Advanced Micro Devices

(AMD) - Get Report

both reported first-quarter earnings that exceeded Wall Street's consensus expectations. It's surprising that solid profit from a couple of chip makers at the dawn of earnings season has done little to spark the market or to lift the recently resurgent

Nasdaq Composite Index

.

Instead, that tech-laden market opened slightly higher and then lost a quick five points before recovering to near yesterday's close. The

Dow Jones Industrial Average

has followed a similar trajectory, led lower by

Merck

(MRK) - Get Report

and

Procter & Gamble

(PG) - Get Report

. Bonds are weaker ahead of economic data coming at the end of the week.

The

Nasdaq High Technology Index

is modestly higher, but the expected surge in tech stocks is nowhere to be seen. What happened? One trader advised a closer look at Motorola's report, which shows a bottom-line earnings surprise -- but also a disconcertingly narrow profit margin. If that's the harbinger of reports yet to come, the tech rally might sputter in coming days.

Of course, some traders humbly take a different view. As one opined, "The market was down earlier; now it's not down as much. Who the heck knows?"