Needed: A Stiff Upper Lip At The Fed

The Dow dropped 32.93 points today-- erasing January's gains. So what will fuel the next rally?With oil, tech and new-home sales rising, two analysts kept coming back to one theme in this "Morning Call" interview: strong nerves at the Federal Reserve.

Randy Lert, chief portfolio strategist at Russell Investment, joined "Morning Call" to chide a market that "seems overreactive" to economic strengths. Offering the classical definition of inflation as "too much money chasing too few goods," Lert foresees no spike in the monetary aggregates that would spur inflation. Thus, the strategist opined that "so long as the Fed stays steady," the market won't be "jittering."

Thomson Financial's Director of Global Research, Michael Thompson, [EDITOR: STET "p"] agreed with Lert. He told CNBC's Carl Quintanilla that it would certainly be a "good thing" if the Federal Reserve "can stay on the fence." Such stability would then buttress capital markets activity, a "key" rally factor. One sector in particular that would benefit: technology, which Thompson believes will "take leadership" in the next few quarters.

Looking ahead, the messages seem mixed. Tech stocks might indeed be in good shape, if today is any indication. Google shares gained $6, or 1.23%. And Microsoft shares gained 67 cents, or 2.2%, after it posted second-quarter earnings of 26 cents per share -- down from the year-ago quarter, but topping estimates. Meanwhile, it was reported today that in December, sales of new U.S. homes rose 4.8%, and durable-goods orders -- ex-transportation orders -- rose 2.3%. But crude oil prices, having eased from their stratospheric highs, rose to $55 per barrel today -- good for petro-traders, but possibly injurious to consumer-driven retail and shipping companies.