Big-Cap Tech Stocks Lead Rebound but Dow Doesn't Come Along

The market looked a little healthier this morning after yesterday afternoon's sprint inspired a much-needed energy boost. Technology stocks were leading the charge, while the broader market was mixed.

Major Indices INDEX CHANGE % VALUE Dow 34.95 -0.3% 10,500.40 S&P 500 8.77 +0.6% 1407.82 Nasdaq 72.63 +2.2% 3343.24 Russell 2000 6.89 +1.5% 468.63 TSC Internet 13.68 +1.8% 784.93 NOTE CHANGE PRICE YIELD 10-Year Treasury 7/32 100 12/32 6.445%

"It's kind of a continuation of the second half of yesterday," said Bill Schneider, head of U.S. equity block trading at UBS Warburg, characterizing the recent action as a "return to normalcy rather than the roller-coaster moves" experienced of late. Speaking of scary rides, the Nasdaq Composite Index had shed 13% in the past week alone and yesterday came dangerously close to breaking through the key 3000 support level before rebounding more than 100 points. Lately the tech-laden measure was up 73, or 2.2%, to 3343, slipping off its intraday high. "There's a better feeling in the pit of your stomach," said Schneider.

The Dow Jones Industrial Average was lately in the red, down 35, or 0.3%, to 10,500. After a brave attempt to follow through on yesterday's strength, the blue-chip measure lost its nerve about a half-hour into trading. The heaviest drags on the Dow were Microsoft (MSFT Quote) and 3M (MMM Quote) which together accounted for more than 27 points worth on the downside.

The S&P 500 was up 9, or 0.6%, to 1408, along with the small-cap Russell 2000 , up 7, or 1.5%, to 469. TheStreet.com Internet Sector index was on the plus side, up 14, or 1.8%, to 785, despite the weight of Yahoo! (YHOO Quote), which was down more than 4 points.

Technology bellwethers were looking very solid. Cisco (CSCO Quote) was up 4.2%, Oracle (ORCL Quote) was rising 9.3% and chip giant Intel (INTC Quote) was up 1.9%. The Nasdaq 100, which is mainly composed of the heavyweight tech stocks, was up 2.4%.

"This is another nice move from the growth stocks, within tech in particular," said one market strategist whose firm will not let him be quoted by name. He noted the focus on solid companies with quantifiable revenues and earnings, especially within areas such as the semiconductor sector. "You're starting to see a subtle shift to the traditional leaders start coming back." Though he admits he thinks at least some of it is probably being driven by technically oversold trading, he thinks it is also a signal of a return to fundamentals.

Semiconductor stocks were looking sharp today, with the Philadelphia Stock Exchange Semiconductor Index gaining 3.8%. Texas Instruments (TXN Quote) had tacked on 5.9% while Micron Technology (MU Quote) was motoring up 10.7%. The SOX is bouncing back after Tuesday setting a new closing low for the year, below its April 14 low.

Transportation stocks were taking a breather after burning up the track yesterday in the wake of United Airlines parent UAL's (UAL Quote) proposed $4.3 billion acquisition of US Airways (U Quote). The Dow Jones Transportation Average was off 2.9%.

Amid a flurry of speculation about the potential effects of the merger, a number of research firms cut ratings on UAL, US Airways and American Airlines parent AMR (AMR Quote), the latter of which some industry analysts view as being in an awkward position right now. UAL was down a fraction after taking a beating yesterday, while US Airways was giving back 6.6% of yesterday's whopping gains. AMR was shedding 5.4%. The American Stock Exchange Airline Index was down 2.8%.

This morning's economic news of revised first-quarter gross domestic product was basically a nonevent. The U.S. economy kept growing at a brisk 5.4% annual rate in the first quarter, with little or no sign of inflation. Ho-hummm. Lately the 10-year Treasury was up 7/32 to 100 12/32, its yield easing to 6.45%.

Despite the short-term upside in the market, many investors are still keeping a wary eye on stocks. "Investors are not ready to jump back in yet," said the market strategist. "People are going to take advantage of the swings. Longer-term, is this the big rally or the big bottom? No one knows."

Market Internals

Breadth was positive, particularly on the Nasdaq, on moderate-to-light volume.

New York Stock Exchange: 1,460 advancers, 1,264 decliners, 512 million shares. 27 new 52-week highs, 36 new lows.

Nasdaq Stock Market: 2,192 advancers, 1,529 decliners, 804 million shares. 24 new highs, 79 new lows.

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For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.