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Tech Industry

THE DAY AHEAD: Market Preview

Despite Tuesday's dip, things could looking up for tech shares Wednesday after an industry group said semiconductor sales will be stronger-than-expected. Asia and Europe had slight gains. The Dow is set to open slightly higher.

U.S.

After three consecutive gains for the broader markets, things fell apart in the last few hours of trading yesterday. Call it the uncertainty factor.

There's a lot of money sitting on the sidelines until the Federal Reserve decides to make its interest rate move on June 29 and June 30. Light volume magnifies the market swings. A shaky bond market also doesn't help.

Since the Fed doesn't meet for a couple weeks that leaves little else but worry. Will the Fed raise rates? What's up (down) with Internet stocks? Will there be peace in Kosovo? It never ends.

It's a recipe for volatility. The good news is that watching the tech sector is a lot like watching a basketball game these days -- you only need to see the last few minutes.

Today we could get some volatility on the upside.

For starters, keep an eye on the semiconductor stocks. The Semiconductor Industry Association revised its 1999 sales forecast higher. The SIA is typically optimistic -- and often wrong -- but chip stocks will take what they can get.

There could also be more spin control on the interest rate concerns. Some analysts contend that a rate hike wouldn't hurt Internet stocks. Keith Benjamin, an analyst with BancBoston Robertson Stephens told Reuters that cash-rich Net companies could fatten their coffers with a rate hike.

That's true. Sort of.

A rate hike could also dilute future earnings. Funny how a rate hike isn't good for other cash-rich companies such as IBM (NYSE: IBM), AT&T (NYSE: T) and Microsoft Corp. (Nasdaq: MSFT). Must be that new economy thing again.

On the economic front, there's not a lot going on until the Producer Price Index comes out Friday at 8:30 a.m. EST.

A couple of upside surprises from Mapquest and Conexant Systems highlight Wednesday's stocks to watch.

On Tuesday, the tech sector stumbled. The Nasdaq Composite Index lost 49.65 to 2,474.56 and the Dow Jones industrial average dipped 143.74 to 10765.64.

The Inter@ctive Week @Net Index dropped 11 to 289 on Tuesday.

At the Bell

The Dow Jones industrial average is set to open up about 20 points. The Standard & Poor's 500 index for June futures contracts edged up 2.8 points to 1324 at 7:20 a.m. EST in 24-hour electronic trading.

Asia

Asia shrugged off the Dow's shaky performance Tuesday. The Nikkei 225 gained 0.36 percent to 16,622.50, the Seoul composite in South Korea fell 6 percent to 803.36, Singapore's Strait Times index climbed .51 percent to 2,006.54 and Hong Kong's Hang Seng edged up 0.07 percent to 12,874.42. Markets in Asia are also awaiting key economic news and are in a holding pattern.

Europe

European markets made modest gains. London's FTSE 100 rose 0.28 percent to 6,449, the CAC 40 in Paris added 0.93 percent to 4,448.51 and the Xetra DAX in Frankfurt gained 1.07 percent to 5, 266.83 at 7:24 a.m. EST.