Afternoon Update: Bond Rally Has Stocks Surging Again

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By John J. Edwards III
Staff Reporter

Adam Smith's

invisible hand may have pulled the market rubberband lower yesterday, but today it's snapping back with a vengeance.

The

Dow Jones Industrial Average

, which yesterday absorbed its largest loss since April 11, today has bounced back more than 100 points. The tech-driven

Nasdaq Composite Index

, which yesterday was off less sharply than the blue-chip measure, has resumed its winning ways with a 13-point pop.

Market players said the upswing has two main catalysts: the bond market's healthy recovery from early weakness, sparked by another high jobless-claims figure; and the seemingly unquenchable new thirst for tech stocks.

Robert Robbins, market strategist at

Robinson-Humphrey

in Atlanta, noted that tech measures like the

Morgan Stanley High Technology Index

and the

Philadelphia Stock Exchange Semiconductor Index

didn't fall yesterday with the broader market, and today they're surging more than 2%.

One trader pointed out that

Merrill Lynch

hosted a high-tech conference call yesterday that "increased people's focus on buying quality names with proprietary technology, like

Texas Instruments

(TXN) - Get Report

." That stock is up 2 to a 52-week high of 95 7/8 -- and, of course,

IBM

(IBM) - Get Report

is soaring after

Credit Suisse First Boston

upped its price target to 195 from 165.

One factor that's not hurting the market in the expected way is the proposed capital gains tax cut. Many observers said the cut, reportedly to be effective yesterday, might spur a wave of selling as investors realized they'd pay lower taxes. But investors seem instead to have decided they can get the new tax effect anytime, so why sell now?

"People are saying, what's the big deal about a capital gains cut?" a trader said. "

Warren Buffett's

not going to sell his

Coca-Cola

(KO) - Get Report

."