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MARKET PREVIEW: Can earnings sustain rally?

Earnings expected Monday may accelerate the rally sparked by last week's benign inflation news. Asia was up, Europe was mixed, and the Dow is set to open slightly higher.

U.S.

The good news Friday was that the U.S. producer price index (PPI) in July rose just 0.2 percent sparked a 1.7 percent surge in the Dow Jones Industrial Average, a 3.5 percent recovery in the Nasdaq, and 2 percent gains in key Asian markets.

Big earnings, like those expected from Hewlett-Packard Co. (NYSE: HWP) after Monday's bell should sustain some of Friday's optimism. H-P should get heavy volume ahead of its third-quarter earnings, and analysts are expecting strong sales and earnings growth.

But jittery techs may remain on edge until Tuesday's key consumer price index, watching for signs of rising inflation that could lead to another interest-rate increase.

Technology stocks that should be among Monday's most actively traded issues include America Online Inc. (NYSE: AOL), Iridium (Nasdaq: IRID) and MCI WorldCom Inc. (Nasdaq: WCOM). Shares of MCI WorldCom dropped in pre-market trading Monday after the company shut down its frame-relay data network for repair over the weekend.

A modest increase in July's Producer Price Index ignited Wall Street Friday as the Dow Jones industrial average surged up 184 points to 10,973.65 while the Nasdaq rose 86 points to close at 2,635.14, the fourth-largest, single-day gain in its history.

At the Bell

The Dow Jones industrial average may open about 1 point higher. The Standard & Poor's 500 index for June futures contracts was up 0.1 points to 1333 at 7:30 a.m. EST in 24-hour electronic trading.

The Inter@ctive Week @Net Index rose 11.54 to 275.35.

Asia

Trading in Asia was making gains. The Nikkei 225 rose 2.24 percent to 17,826, Singapore's Strait Times index added 1.47 percent to 1,999 and Hong Kong's Hang Seng grew 2.27 percent to 12,895.

Europe

European markets were mixed. London's FTSE 100 fell 0.12 percent to 6,238. The CAC 40 in Paris slipped 0.08 percent to 4,430 and the Xetra DAX in Frankfurt was up 0.03 percent to 5,221 at 6:35 a.m. EST.

Reuters contributed to this report.