This morning, it was mum's the word for Alan Greenspan, as the Fed chairman addressed the Federal Reserve Bank of Chicago. Although his tone was cautionary, the G-man's comments did not ignite a stock-market selloff. In fact, by keeping the fed funds rate on the down low, Greenspan actually boosted the bond market and buffered stocks against another set of economic data that indicated traces of inflation.

Today, the

Labor Department

reported that first-quarter

productivity rose 2.4%, below the

Reuters

consensus poll forecast of 3.7%. But unit labor costs came in stronger than expected at 1.8%, topping the 1% outlook and surpassing last quarter's 2.5% decline. This sent an early-morning shiver down investors' spines, as they braced themselves for what could have been Round 3 of a selloff.

"This morning's numbers were benign, but the unit labor costs initially spooked the market," said Jim Volk, co-director of institutional trading at

D.A. Davidson

in Portland, Ore.

But shortly after the open, Wall Street insiders brushed off the number and waited for Greenspan's 9:30 a.m. EDT

speech to unfold. "We didn't see a jump in compensation, which would have validated last week's ECI report, said Mike Cloherty, senior market economist at

Credit Suisse First Boston

. "So given that, we saw a slight amount of pressure. But Greenspan didn't use his speech as an opportunity to signal any faster rate hikes," thus leaving investors to take no news, as good news.

So what about those rumors about an intermeeting hike? Most savvy investors are dismissing such action as uncalled for given the economic reports we've seen so far. "It would be extremely rare," said Cloherty, who's forecasting a 25-basis-point rate increase at the May 16

Federal Open Market Committee meeting and another quarter-point hike in June. "That's a sign of panic and there's no evidence in data that would require that kind of extremely aggressive action."

Lately, the

Dow Jones Industrial Average

, which was down 8.9% for the year through yesterday, was off 25, or 0.2%, to 10,455, with its retail components still up for sale after yesterday's bearish macro call out of

Goldman Sachs

. The firm cut its rating on several retailers, citing bracing for a possible slow down in consumer spending due to rising interest rates.

Home Depot

(HD) - Get Report

was off 1 1/4, or 2.3%, to 52 3/4, while

Wal-Mart

(WMT) - Get Report

, which posted a 10.9% increase in

same-store sales, was losing 1 5/8, or 3%, to 51 13/16.

The

S&P Retail Index

fell 2.4%.

On the

New York Stock Exchange,

British Telecom

(BTY)

was taking it on the chin after rumors circulated that it was scaling down its profit outlook. British Telecom denied the talk but was still down 6.2%.

Despite weakness in most Old Economy stocks, the oil sector was still fueled by stellar first-quarter earnings, which in turn were driven by oil prices.

The

American Stock Exchange Oil & Gas Index

was climbing 1.6%, with Dow component

ExxonMobil

(XOM) - Get Report

on the upside.

The

Morgan Stanley Commodity Related Equity Index

, which includes oil services stocks such as

Baker Hughes

(BHI)

and

Schlumberger

(SLB) - Get Report

, was also faring well.

Lately, the

Nasdaq Composite Index

, which was already off 26.6% from its March 10 high through yesterday, was falling 4 to 3703. In 1999, the index shrugged off threats of Fed rate hikes, but so far this year, tech investors have become more attuned to the G-man's actions as they consider how an economic slowdown would put a lid on the hot issues. "I don't know if we'll test the lows on the Nasdaq, but I think we'll continue to sell off," said Volk.

In Nasdaq trading,

Sapient

(SAPE)

was a winner, after

Standard & Poor's

tapped the stock to replace

Reynolds Metals

(RLM) - Get Report

in the

S&P 500

.

On the tech front, the

Nasdaq Biotechnology Index

was lifting 3.9%.

Elsewhere,

TheStreet.com Internet Sector

index was in positive territory, up 11, or 1.3%, to 881, with gains from

Inktomi

(INKT)

. The software company announced a deal with

Nokia

(NOK) - Get Report

.

The broad S&P 500 was off 4 to 1411, while the small-cap

Russell 2000

was up 3, or 0.7%, to 499.

Market Internals

Breadth was positive on both the Big Board and the Nasdaq, on moderately light volume.

New York Stock Exchange:

1,541 advancers, 1,208 decliners, 524 million shares. 32 new 52-week highs, 42 new lows.

Nasdaq Stock Market:

1,939 advancers, 1,742 decliners, 714 million shares. 14 new highs, 53 new lows.

For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.