NEW YORK (CNNfn) - An early rally on Wall Street vanished Tuesday after a promising business outlook from Oracle failed to convince investors that corporate profits have really bottomed.
The Nasdaq composite index broke a seven-session losing streak by the slimmest of margins: 4 points. But that's a big drop from the more than 3 percent gain that came after Oracle, the No. 2 software maker, signaled that business demand is picking up.
"The market, I think, is treading water and needs more than Oracle," Larry Lawler, head of stock trading at Dreyfus Corp. told CNNfn's Street Sweep.
It didn't look that way at the start of trading, when all the major indexes rose. But another round of warnings from companies and the analysts who follow them overshadowed any optimism from Oracle. Profit problems appeared outside of technology, as well. AMR, the parent of American Airlines, and dairy products maker Dean Foods both issued shortfalls.
The Nasdaq rose 4.03 points to 1,992.66, its first gain since June 7. Another loss would have handed the Nasdaq its first eight-session losing streak since Sept. 27, 1994.
Blue chips had a pullback of their own. After being up as much as 95 points, the Dow Jones industrial average shed 48.71 to 10,596.67. The S&P 500 added 4.15 to 1,212.58.
More stocks fell than rose. On the New York Stock Exchange, declining issues topped advancing ones 1,547 to 1,499 as 1.1 billion shares changed hands. Nasdaq losers beat winners 2,171 to 1,587 as 1.9 billion shares traded.
In other markets, Treasury securities edged higher. The dollar rose against the euro and fell versus the yen.
Listening to the Oracle?
Oracle's fiscal fourth-quarter profit topped expectations by a penny a share. Looking forward, the software maker said it would meet earnings targets for the current quarter.
While Oracle, in its conference call, signaled that software demand was picking up, that wasn't enough to overshadow the latest round of profit problems.
"One day does not make a bull market and I don't think Oracle's going to turn us," Jack Baker, head of equities at Putnam Lovell Securities, told CNNfn's Market Call.
Level 3 Communications (LVLT: down $0.78 to $5.19, Research, Estimates), which tumbled Monday, did so again. The telecommunications company cut 1,400 jobs and lowered its 2001 sales outlook.
Metromedia Fiber Network (MFNX: down $0.51 to $1.59, Research, Estimates), a builder of high-speed fiber-optic networks, cut its financial outlook for the current year.
Exodus Communications (EXDS: down $0.78 to $2.84, Research, Estimates) tumbled after no fewer than three investment banks cut their stock ratings for the computer services company.
"What you need is not just Oracle, but two or three, four tech stocks to say things are stabilizing, things are picking up," Arthur Cashin, director of floor trading at UBS Warburg, told CNNfn's The Money Gang.
While that didn't happen, Oracle's (ORCL: up $1.92 to $16.76, Research, Estimates) stock still rose 13 percent in heavy trading volume of 123 million shares.
The company credited some of the apparent business turnaround to the Federal Reserve, which is expected to cut rates June 27 for the sixth time this year.
The gains spread to other software makers, including Siebel Systems (SEBL: up $3.61 to $41.90, Research, Estimates), Microsoft (MSFT: up $0.44 to $67.32, Research, Estimates), and Veritas (VRTS: up $1.07 to $61.70, Research, Estimates).
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Qwest Communications (Q: up $1.45 to $31.27, Research, Estimates) also had encouraging news. The company said strong demand for its broadband Internet services will help it meet its financial targets this year.
Financial stocks also rose. In its latest quarterly report, Lehman Brothers (LEH: up $5.20 to $72.50, Research, Estimates) said fiscal second-quarter earnings fell to $1.38 a share, above forecasts.
Gains in J.P. Morgan (JPM: up $0.21 to $44.52, Research, Estimates) and Citigroup (C: up $0.96 to $50.75, Research, Estimates) kept the Dow's losses from being worse.
One of the Dow's biggest problem companies, Honeywell International (HON: down $1.50 to $38.50, Research, Estimates), tumbled as much as 8.2 percent. The president of General Electric (GE: down $0.13 to $48.87, Research, Estimates), the company that wants to buy Honeywell, put the chance of the deal's approval by European regulators at "zero."
United Technologies (UTX: down $3.06 to $74.75, Research, Estimates), considered a possible buyer of Honeywell, also sold off, as did Boeing (BA: down $3.08 to $61.80, Research, Estimates).
Profit disappointments spread beyond technology stocks. Dean Foods (DF: down $1.36 to $39.03, Research, Estimates), which specializes in dairy products, said its fiscal fourth-quarter profit would miss expectations. American Airlines parent AMR (AMR: down $1.52 to $34.40, Research, Estimates) said it expects to report a $100 million second-quarter loss.
The market could face more trouble in the weeks ahead when companies begin reporting June quarter results, which are expected to see the biggest drop in more than a decade. 
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