Before trading opened today,

IBM

(IBM) - Get Report

warned, Iraq threatened, and Israel proved obstinate. Predictably, that trio proved to be damaging for equities in the early going.

However, the damage proved ephemeral as major averages closed well off their morning lows. Once as low as 10,120.87, the

Dow Jones Industrial Average

closed down 0.2% to 10,249.08. IBM exerted a negative influence to the tune of 68 Dow points after Big Blue said its first-quarter earnings and revenue will fall short of analysts' expectations. (For once the rumors were right; scuttlebutt of a warning from IBM was widely

heard Thursday and Friday.)

Less exposed to IBM, which lost 10.1% to $87.41 after trading as low as $85.35, broader averages fared even better. Once as low as 1111.79, the

S&P 500

closed up 0.2% to 1125.29. The

Nasdaq Composite

finished up 0.9% to 1785.78 after trading as low as 1733.84.

Of course, bulls were cheered by the market's ability to withstand the news from IBM, as well as the renewed spike in crude prices after

Iraq ordered a 30-day halt in oil sales and Israel defied President Bush's call for withdrawal. Crude futures rose 1.3% to $26.54 a barrel, giving related shares a boost; the Amex Oil & Gas Index rose 1.4% while the Philadelphia Stock Exchange Oil Service Index climbed 1.1%.

The market's ability to withstand negative news was impressive. Moreover, it was fairly broad-based. Advancing stocks bested declining issues 18 to 13 in

Big Board

trading and by 19 to 16 in Nasdaq activity.

However, the market continues to be dogged by a lack of investor interest, either on the upside or downside. Trading volumes were modest again today, with 1.1 billion shares traded on the New York Stock Exchange and 1.4 billion in over-the-counter activity.

As with almost all things, there are two schools of thought regarding the meaning of the decline in activity (although everyone agrees it's putting pressure on retail and online brokers, as today's decision by

AmeriTrade

(AMTD) - Get Report

to acquire privately held Datek suggests.)

On a hopeful note, the low trading volume and accompanying flat market in the first quarter indicate a decline in the number of buyers, not an increase in sellers, observed Sy Harding, president of Asset Management Research in Meredith, N.H.

"The popular thought, anyway, is that quiet market periods are usually followed by rallies rather than the corrections that hesitant investors fear," Harding wrote, reiterating the view expressed

here on Friday.

The veteran market-timer and publisher of

The Street Smart Report

is taking a wait-and-see attitude, suggesting the forthcoming barrage of quarter earnings will "finally break the three-month-long flat-market deadlock and determine the market's next direction."

Certainly, some investors are waiting to see whether corporate America confirms the recovery marco economic data have suggested is well under way. (Today's report that wholesale inventories fell 0.7% in February vs. expectations of a flat reading and a revision of January's drop to 0.5% from 0.2% reinforced hopes that the salutary effects of inventory restocking will soon follow.)

But Alan Newman, editor of H.D. Brous'

CrossCurrents

, sees a downside to the declining volume. "Investors cannot possibly be attracted to a stock market where continued revelations of despicable actions are the order of the day," he commented. "We expect at least a slow and steady exodus of investors to impact the supply-demand equation for years to come."

Newman referred specifically to last week's revelations of off balance sheet lending to insiders at

Adelphia Communications

(ADLAC)

. But today's reports of lawsuits against major Wall Street firms for their alleged culpability in the Enron

(ENRNQ)

fiasco, and a separate court order by the New York attorney general against Merrill Lynch

(MER)

, certainly fit the bill as well. (The lawsuits may weigh on investor sentiment but didn't impact financial shares much today; the AMEX Broker/Dealer Index rose fractionally.)

The newsletter writer believes the recent lack of volatility -- which is often a harbinger of increased volatility -- will ultimately resolve with a substantial correction. "The longer this complacent environment endures, the higher the odds for a more substantial correction," he wrote, reiterating a forecast that "a full-scale test" of the September lows is still possible this year.

Being that Newman is one of Wall Street's most notorious bears, his attitude about the recent market action isn't surprising and will likely be dismissed by many readers. Then again, Newman was short IBM heading into this week, so perhaps he deserves your attention.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.