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The Dow Industrials built an early gain to 8,805 this morning, but has given back the bulk of those gains, while Dow component United Technologies (NYSE:UTX) $66.39 +3.09% leads component gainers after reporting better than expected earnings this morning.

The major indexes followed the Dow higher in early morning trade, on what many feel are trading floor rumors that Saddam Hussein is going into exile in Syria. While this is considered rumor, it did appear to have given stocks a lift, that has begun to fade. I personally have never been to Syria, but I hear it's a nice place to go into exile.

Sector action is rather mixed today with the Biotechnology Index (BTK.X) 374 +3.15% leading this morning's sector gains after Leerink Swann upgraded shares of Genzyme (GENZ) $35.91 +2.25% to "market perform" from "underperform," saying that most of the negative issues they identified when they initiated coverage have been reconciled, and that the negative impact of weakness in end- user demand for Renagel could be offset by the launches of Fabrazyme and Aldurazyme.

Traders are also attributing bullishness in the biotechnology group to a rotation out of the semiconductor sector based on Tuesday evening's comments from Intel (NASDAQ:INTC) $17.22 -0.8% that it wasn't seeing any near-term type of economic recovery to benefit the sector until the latter half of this year and was cutting its capex budget for 2003. The Semiconductor Index (SOX.X) 317.64 -2.27% currently leads today's sector decliners list and was yesterday's sector loser.

Shares of Sun Microsystems (NASDAQ:SUNW) $3.77 -2.32% is this morning's second most actively traded stock at 24.5 million shares, just behind Cisco Systems (NASDAQ:CSCO) $15.01 -1.11% after Bernstein said in a pre-market note that channel checks suggest that SUNW's demand remains relatively weak, and bucking the general sentiment of the marketplace. Bernstein said it believes SUNW's recently completed quarter finished soft and the firm sees limited to no upside to the consensus revenue estimates of 5% sequential growth.

While equities see a mixed trade, Treasuries are seeing marginal selling across the major maturities. The 10-year March futures contract (ty03h) 112'270 -0.43% trades lower, which has the benchmark bond's YIELD ($TNX.X) 4.126% rebounding from yesterday's test of a trying to round higher 50-day SMA of 4.038%. Action here should help put a bid under equities and YIELD support looks to be firming at 4.0%. Traders may look to correlate this YIELD level with recent lows in the major indexes. YIELD resistance on this bond currently stands at 4.2% and a move above that level would most likely correlate with equity indexes breaking above there recent week's highs.

Treasuries may be a very good near-term observation for equity traders to keep and eye on, as it is somewhat "removed" from tonight's earnings our of IBM and MSFT.

Jeff Bailey

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