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MARKET PREVIEW: Techs to continue relief rally

Relieved by signs that inflation is relatively tame, techs should continue Tuesday's late day rally Wednesday, spurred on by the rush of upside earnings surprises. Asia was up, Europe was mixed, and the Dow is set to open flat to slightly higher.

U.S.

As there are no more key economic indicators to be released before the Federal Reserve's August 24th meeting, techs will have to find news to move on. Tuesday's big news that the July consumer price index rose 0.3 percent overall and 0.2 percent at the core, which excludes food and energy items, is just one more inconclusive piece of the puzzle that investors have to mull over for the next week.

Despite the benign forecast offered by Tuesday's consumer price index, inflation is far from negligible. In a survey of 181 members of The National Association for Business Economics in July, 3 percent of the NABE panel said they expected rates to be raised over the next six months, compared with 20 percent who predicted higher rates in March's survey. The number one threat to the economy was given as "the danger of a stock market 'bubble' in U.S. equity markets and related danger of financial market volatility." This is a major shift from last year's consensus that a world economic crisis with deepening woes in Japan, and collapsing markets in Asia and Russia were main causes of concern.

Tuesday's earnings should make waves Wednesday, with mixed results. Bellwether Dell Computer Corp. should gain after posting second-quarter profits that jumped 47 percent. The No. 2 PC maker earned $507 million, or 19 cents a share, beating First Call's estimate by 2 cents.

The semiconductor revival proved it's in full swing with the earnings success of semiconductor components maker Applied Materials Inc (Nasdaq: AMAT). It may be about to fall from its apex, though, as the company's lower-than-expected order number suggests. Applied Materials said income more than tripled in the third quarter and creamed First Call's estimates by 8 cents a share, but

Lycos also surprised Wall Street Tuesday. Better-than-expected sales brought in the company's first operating profit in a year and a half. Lycos pocketed $600,000, or 1 cent a share, on sales of $45.1 million. First Call consensus was break even for the portal. Analysts were expecting sales of around $38 million.

Technology stocks that will be among Wednesday's most actively traded issues include Applied Materials Inc. (Nasdaq: AMAT), BEA Systems Inc. (Nasdaq: BEAS), Dell Computer Corp. (Nasdaq: DELL) and Lycos Inc. (Nasdaq: LCOS).

A day of indecisive trading ended with broad market indices charging higher in the final hour of the session. The tech-heavy Nasdaq Composite Index climbed 25.95 to 2671.23, and the S&P 500 gained 13.39 to 1344.16. Inter@ctive Week's @100 Index rose 34.86 to 4,977.47. The Dow Jones Industrial Average went up 70.29 to 11117.08.

At the Bell

The Dow Jones industrial average may open about 4 points higher. The Standard & Poor's 500 index for June futures contracts was up 0.5 points to 1348 at 7:35 a.m. EST in 24-hour electronic trading.

The Inter@ctive Week @Net Index rose 9.09 to 289.70.

Asia

Trading in Asia took the lead from U.S. markets' reaction to the mild Dow. The Nikkei 225 gained 0.18 percent to 17,892, Singapore's Strait Times index jumped 3.30 percent to 2,049 and Hong Kong's Hang Seng added 1.76 percent to 12,993.

Europe

European markets were mostly looking up. London's FTSE 100 grew 0.64 percent to 6,206. The CAC 40 in Paris gained 0.34 percent to 4,495 while the Xetra DAX in Frankfurt slipped 0.08 percent to 5,256 at 6:50 a.m. EST.

Reuters contributed to this report.