After phoning in sell orders this morning, investors redialed their brokers this afternoon.

A late-afternoon buying spree pared morning losses that piled on after an early-morning profit warning from mobile-phone maker

Nokia

(NOK) - Get Report

. The

Nasdaq Composite finished down 1 point to 2170. Earlier in the day, the tech-heavy index was off as much as 65.4 points, or 3%. The

Dow Jones Industrial Average ended up 26 points, or 0.2%, to 10,948. It had been down as much as 174.5 points, or 1.6% during the trading day.

Analysts attributed the late-day recovery to short-covering, when investors buy back stock sold short. "What we saw was a nice short-covering rally. Options premiums

the amount per share paid by an options buyer to a seller are getting too rich; shorts pushed the market higher," said Bryan Piskorowski, market commentator at

Prudential Securities

. "This was not a news-driven scenario."

Friday is

triple-witching, the quarterly expiration of index futures, index future options and certain stock options, which tends to result in higher volume and greater volatility when it rolls around.

Trading volume has been low and it was again below the yearly average today. But it had picked up compared with recent trading: 1.1 billion shares changed hands on the

New York Stock Exchange, compared with the 1.3 billion daily average. Still, today was the heaviest volume day since May 22. And 1.65 billion shares were in play on the Nasdaq, versus the average of 1.8 billion. The Nasdaq had its highest volume day since June 5.

Other traders read more than just short-covering into today's turnaround: "Stocks got to a price-level where investors saw value," said Matt Johnson, head of Nasdaq trading at

Lehman Brothers

. "Further, the market is starting to price in a 50 basis-point

interest rate cut at the end of the month."

Waiting on the Fed

Wall Street awaits the Fed's next policy meeting -- which arrives on June 26 and 27. The

fed fund futures, a good proxy for monetary policy, are pricing in a 100% chance there will be a 25-basis-point cut and a 14% possibility of a 50-basis-point cut.

U.S. Treasuries rose today for a second-straight day as optimism about a rate-cut brewed. Since the beginning of the year, the Fed has cut rates five times, bringing short-term rates 2.5 percentage points lower.

Over the past three days, the market has contended with profit warnings from a wide swath of corporate America. Investors, who sent stocks up significantly from late March through early May based on hopes of an economic recovery, are now worried a second-half turnaround is increasingly unlikely.

Nokia, which had been considered a safe haven in the technology sector, warned before the opening bell today that it expects the global mobile-phone market to have only

"very modest growth" this year. The Finnish cell-phone company also said weaker market conditions will hurt its financial performance during the second quarter.

Shares of Nokia fell 19% to $23.26, and its competitors tumbled alongside it.

Ericsson

(ERICY)

lost 3.6% to $5.30, while

Motorola

(MOT)

slid 5.8% to $14.

"The market has been afraid of a parade of profit warnings," said Todd Clark, head of listed trading at

W.R. Hambrecht

. "Nokia's warning that it doesn't see light at the end of the tunnel means that the possibility of discounting growth in the second half of the year needs to be thrown out the window."

Technology weakness weighed on industry bellwethers and lesser-known companies alike during most of the trading day. Chipmaker

Intel

(INTC) - Get Report

, one of the 30 stocks in the blue-chip Dow, fell 0.6% to $30.13, for example.

Another Dow stock, manufacturing and technology conglomerate

Honeywell

(HON) - Get Report

slumped 3.9% to $43.47. Yesterday

General Electric's

(GE) - Get Report

planned acquisition of Honeywell ran into obstacles with regulators in Europe. According to press reports, they asked GE to sell more than half of Honeywell's aerospace division, the very business that makes it an appealing purchase.

There was some positive news today, however.

Dell

(DELL) - Get Report

was

upgraded to outperform from neutral by

Morgan Stanley Dean Witter

, helping to push the PC maker's stock up 3.3% to $26.10. And

Kraft

raised the price range for its

initial public offering, which is scheduled for tomorrow. Tobacco giant

Philip Morris

(MO) - Get Report

will let go of a 16% stake in the food giant. At the top end of the new range, the IPO would bring Philip Morris $9.03 billion, which will be used to pay down the company's debt.

But the news driving trading today was overwhelmingly negative. Shares of software companies traded lower after

Goldman Sachs

analyst Rick Sherlund said executives were very concerned about the European slowdown and a second quarter that won't show any improvement over the first quarter. For example,

EMC

(EMC)

was off 0.5% to $31.74 and

Oracle

(ORCL) - Get Report

slipped 0.4% to $16.13.

For the year, the four major indices are mixed. The Dow is up 1.5%, the Nasdaq is down 12.2%, the

S&P 500 is behind 4.9%, and the Rusell 2000 is ahead 4.8%. Drug, semiconductor, and computer stocks closed up, even though they spent most of the day on the losing end. Cyclical, transportation, and networking stocks finished down. For a closer look at individual sectors, check out

TSC's Markets Page.

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International

London's

FTSE 100

fell 56.5 points to 5504. The

CAC-40

in Paris dropped 106.5 points to 5311.9 and Frankfurt's

Xetra Dax

was 115 points lower to 6047.8.

The euro was lately trading at $0.8481. The dollar was trading at 121.69 yen.

Monday's reported weaker-than-expected quarterly GDP data for Japan and weakness on the Nasdaq continued to pressure Asian markets. Tokyo's

Nikkei 225

closed down 386.38 points, or 2.92%, to 12,840.10. Hong Kong's

Hang Seng

closed down 148.81, or 1.09%, to 13,526.68.

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