SAN FRANCISCO -- Now for something completely different.

The

Federal Open Market Committee

raised the fed funds target rate by 25 basis points today, as was expected by most -- but not all -- market players. (The Fed also increased the discount rate by 25 basis points.) Such a move was widely expected to encourage stocks to rally further, especially if the

Fed

maintained its neutral bias, which it did.

Yet after rallying in the initial reaction to the Fed's

announcement, the majority of stocks reversed sharply. They recovered by day's end, but major averages ended mixed in a session that left market players somewhat befuddled.

"They sucked us in," said one market player. "It was too easy. Everyone was looking for a 'sell on the news' and here it is."

Conversely, the bond market -- which usually recoils at higher interest rates -- rallied smartly across the yield curve. The price of the 30-year Treasury bond rose 22/32 to 102 20/32, its yield falling to 5.94%.

Still, the

Dow Jones Industrial Average

could not extend

yesterday's record-setting advance. The blue-chip proxy rose as high as 11,365.93 in the wake of the 2:15 p.m. EDT rate-hike announcement, but dove as low as 11,194.01 less than 30 minutes later. The index found some support at that level and spent the rest of the afternoon lurching toward breakeven before closing down 16.46, or 0.2%, to 11,283.30.

IBM

(IBM) - Get Report

was the Dow's biggest negative influence, falling 2% despite a buy rating reiteration by

SoundView

. Rumors abound IBM will miss earnings estimates for the quarter.

The Dow was also hampered by cyclical names such as

Union Carbide

(UK)

, which retreated as investors interpreted the Fed's attempt to restrain economic growth as a negative for commodity-based companies. The

Morgan Stanley Cyclical Index

fell 0.4%. Energy stocks were hit by the same sentiment and an accompanying decline in crude prices; the

American Stock Exchange Oil & Gas Index

fell 1.1% while the

Philadelphia Stock Exchange Oil Service Index

lost 2.3%.

Conversely, the

Nasdaq Composite Index

rose 32.79, or 1.2%, to 2752.36 after trading as high as 2770. Thanks largely to strength in big-cap tech, the

S&P 500

gained 3.28, or 0.2%, to 1363.50 after trading as high as 1373.32 and as low as 1353.74.

Rallying tech favorites included

Microsoft

(MSFT) - Get Report

,

MCI WorldCom

(WCOM)

,

Micron Technology

(MU) - Get Report

and

Motorola

(MOT)

. The

Nasdaq 100

rose 0.8%; the

Morgan Stanley High Tech 35

gained 1.4% and the

Philadelphia Stock Exchange Semiconductor Index

rose 2.7%.

Microsoft rose 6.6% on news of a favorable ruling in its court battle with

Sun Microsystems

(SUNW) - Get Report

, plus reports former

Silicon Graphics

(SGI)

CEO Richard Belluzzo will joint the software colossus to run its Internet division. (

TheStreet.com

reported on the possibility

last night.)

TheStreet.com Internet Sector

index fell 7.92, or 1.4%, to 563.76 while the

Russell 2000

slid 0.13, or 0.03%, to 437.12.

"A lot of people lost money today," said Sam Ginzburg, managing director of equity trading at

Gruntal

, who claimed he was not among them. "It was one of the more frustrating days as a trader. You had no decisiveness either which way."

Ginzburg, who had been expecting no move from the Fed, said he immediately "went and chased things" when the news came out, focusing mainly on financials. But when they "ran right back" after the initial upturn "I said 'forget it' and sold," he said.

Most frustrating was an expectation that "I'd have some conviction either way now that

the Fed has done something," he said. "But I wouldn't make a bet what the market is going to do. If you put my feet to the fire I say we go down some, but I have no conviction that's going to happen."

Ginzburg, who correctly predicted stocks were "primed to rally" back on

Aug. 3, fears the dollar could spearhead a short-term retreat.

"If it continues to act poorly then we have nothing," he said. "Thank god bonds are up."

In late New York trading, the dollar was quoted down 0.59 to 111.05 yen.

In

New York Stock Exchange

trading, 726.5 million shares were exchanged while declining stocks led advancers 1,686 to 1,284. In

Nasdaq Stock Market

action 1.04 billion shares traded while losers led 1,748 to 2,128. New 52-week lows bested new highs 96 to 55 on the Big Board but new highs led 117 to 74 in over-the-counter trading.

Sense and Senselessness

Some market players said there was rationality in Wall Street's bifurcated reaction to the rate hike today, noting stocks had rallied sharply in anticipation. Some bond traders, meanwhile, feared a 50-basis-point hike and thus took solace in the quarter-point move.

Meanwhile, a variety of market participants agreed the debate about the Fed's bias was overdone.

Like many, Donald Fine, chief market analyst at

Chase Asset Management

, noted the Fed had a neutral bias heading into today's meeting.

"To tighten and then at the same time say they have a bias toward tightening subjects them to criticism as to why didn't they do more," Fine said. "It stand to reason the Fed almost invariably adopts a neutral bias after making a move."

Despite a consensus to the contrary, the Fed's adoption of a neutral bias "does not guarantee they'll not move" at the October meeting or thereafter, he continued.

The two-year note rose 4/32 to 99 26/32, yielding 5.60%, but is still 35 basis points above the Fed's new target rate of 5.25%. The spread suggests "the bond market is allowing for one more move but is not certain it's going to take place," Fine said.

As for the stock market, the Fed's is action is a positive, the analyst said.

"The lack of inflation is the major thrust behind our economic performance and anything you can do to engender further downward pressure on inflation is good for stocks," he said. The stock market "seems high relative to any historical measure and at some point it will stop rising. This is not that point."

Among other indices, the

Dow Jones Transportation Average

rose 36.48, or 1.1%, to 3234.90; the

Dow Jones Utility Average

rose 1.67, or 0.5%, to 321.25; and the

American Stock Exchange Composite Index

fell 3.09, or 0.4%, to 789.42.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

slid 10.76 to 7164.20 and the

Mexican Stock Exchange IPC Index

gained 31.96 to 5247.10

Tuesday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Net2Phone

(NTOP)

jumped 6 1/2, or 13.9%, to 53 1/8 after it unveiled a union with

Compaq

(CPQ)

to provide Internet telephony services to new Compaq Presario customers in certain countries. According to the deal, a button on the Presario keyboard would link Net users to a Compaq and Net2Phone joint Web site that includes free computer-to- telephone software, downloading instructions and Net2Phones rates. Compaq has started distributing the keyboards in Canada, Latin America, Japan and Asia-Pacific. Shares of Compaq was off 9/16 to 23 1/2.

Separately, Net2Phone appointed former

Bloomberg New Media

General Manager Jonathan Fram as its president. Earlier today,

Deutsche Banc Alex. Brown

started coverage of Net2Phone at buy.

Mergers, acquisitions and joint ventures

AT&T

(T) - Get Report

slipped 5/8 to 46 5/8 after it said it forged an agreement to acquire the Brazilian-headquartered telecommunication services provider

Netstream

. AT&T said it plans on taking a $300 million stake in the company, while bolstering Netstream's Brazilian clientele.

Cyprus Amax Minerals

(CYM)

is facing pressure from shareholders to break ranks with

Asarco

(AR) - Get Report

on their pending get-together in light of

Phelps Dodge's

(PD) - Get Report

unsolicited bids to acquire Cyprus and Asarco for $2.7 billion in stock,

The Wall Street Journal

reported, citing people familiar with the situation. Shares of Cyprus were up slightly to 17 13/16, while Asarco climbed 1/8 to 22 5/8. Phelps Dodge shares declined 1/4 to 59 13/16.

Gentner Communications

(GTNR)

advanced 3/8, or 6.2%, to 6 5/8 after it set a strategic partnership under which

NextLink Communications

(NXLK)

will distribute Gentner's conference-calling services to its long-distance customers in Arizona, Colorado, Nevada, New Mexico, Oregon, Utah and Washington. NextLink shares increased 3/8 to 93.

The

Kansas Corporation Commission

said it conditionally supports the union of power companies

Western Resources

(WR)

and

Kansas City Power & Light

(KLT)

. The potential merger would form a new company,

Westar Energy

, serving more than 1 million customers in Kansas and Missouri. A deal was initially made with the KCC staff earlier this year that permitted Western Resources to include an acquisition premium in the rate base for Kansas customers. Commissioners later dismissed the agreement, not allowing a premium to be factored into the rate base. A KCC spokesperson said it would issue an order on the merger in four to six weeks, saying that the commissioners had agreed on the company's estimate of about $1 billion in merger savings over the next 10 years. Shares of Western Resources increased 7/16 to 23 13/16, while Kansas City Power & Light was up 13/16 to 24 5/16.

Nortel Networks

(NT)

declined 1/8 to 43 1/2 after it said it plans to buy

Periphonics

(PERI) - Get Report

for an estimated $436 million in stock. Shares of Periphonics jumped 2 9/16, or 10.2%, to 27 3/4.

Earnings/revenue reports and previews

Brown Shoes

(BWS)

advanced 7/16 to 17 5/16 after it posted second-quarter earnings of 58 cents a share, beating both the single-analyst estimate of 54 cents and the year-ago 24 cents.

Cole

(CNJ)

was unchanged 8 1/16 after it reported second-quarter earnings of 27 cents a share, beating the two-analyst estimate of 25 cents but down from the year-ago 64 cents.

Just For Feet

(FEET)

fell 15/16, to 17.4%, to 4 1/2 after it reported a second-quarter loss of 83 cents, falling short of the five-analyst estimate of a 73 cent loss and the year-ago 25 cents gain.

Medical Manager

(MMGR)

, formerly known as

Synetic

, slumped 2 3/8 to 56 15/16 after it announced plans to restate results for its

Medical Manager Health Systems

division for the fiscal 1999 third and fourth quarters. In July, Synetic bought MMHS, which was then known as Medical Manager Group. After the merger, Synetic assumed the Medical Manager name and named the acquired unit Medical Manager Health Systems. Medical Manager began trading today on Nasdaq under the symbol MMGR. The company said it plans to restate the earnings to reflect the sale of software licenses as an acquisition price reduction of the related transactions.

Perry Ellis International

(PERY) - Get Report

hopped 1, or 8.3%, to 13 1/4 after it posted second-quarter earnings of 23 cents a share, ahead of the two-analyst estimate of 17 cents and up from the year-ago 15 cents.

Regis

(RGIS)

popped 15/16 to 20 1/2 after it posted fourth-quarter earnings of 32 cents a share, which excludes nonrecurring items, in line with the six-analyst estimate and up from the year-ago 27 cents.

Smithfield Foods

(SFDS)

declined 15/16 to 28 5/8 after it posted first-quarter earnings of 15 cents a share, missing the three-analyst estimate of 18 cents but up from the year-ago 14 cent-loss.

Offerings and stock actions

Priority Healthcare

(PHCC)

slid 7/16 to 23 after it announced plans to initiate a 2 million-share repurchasing program. The company said it had about 19 million diluted shares outstanding in the second quarter.

Siebel Systems

(SEBL)

soared 5, or 8.5%, to 67 1/16 after its board approved a 2-for-1 stock split.

Sterling Financial

(SLFI)

was up 1/4 to 31 3/4 after it announced a 5-for-4 stock split through a 25% stock dividend to shareholders of record Nov. 1, payable Nov. 15. The company also declared a 23-cent cash dividend to shareholders of record Sept. 16, payable Oct. 1.

Analyst actions

American National Can

(CAN)

advanced 1/4 to 17 after

Goldman Sachs

rolled out coverage of the shares with a market outperform rating.

Apache

(APA) - Get Report

increased 7/16 to 45 1/8 after

ING Barings

upped its rating on the shares to a buy from a hold and set a new price target of $51 to $53.

Biopure

(BPUR)

was up slightly to 8 1/8 after

J.P. Morgan

started coverage of the stock with a buy rating.

Creo Products

(CREO)

was unchanged at 20 1/4 after

Merrill Lynch

initiated coverage of the stock with a near-term accumulate and a long-term buy.

Duke Energy

(DUK) - Get Report

popped 1 1/2 to 57 1/8 after

Morgan Stanley Dean Witter

upgraded the stock to a strong buy from outperform.

Dycom

(DY) - Get Report

jumped 3 1/2, or 8.9%, to 42 5/8 after

Banc of America Securities

upped its rating to strong buy from buy.

Finishline

(FINL)

fell 1 1/16 to 9 1/2 after Banc of America analyst Susan Silverstein cut her rating on the stock to a market perform from a buy.

Gap

(GPS) - Get Report

declined 1/8 to 41 5/8 after Deutsche Banc Alex. Brown cut the stock to a market perform from a buy.

IMC Global

(IGL)

dipped 13/16 to 17 7/8 after Morgan Stanley Dean Witter downgraded it to neutral from outperform.

N2H2

(NTWO)

slipped 5/16 to 10 3/4 despite

U.S. Bancorp Piper Jaffray

initial strong buy rating and a price target of 20.

NetIQ

(NTIQ)

increased 7/8 to 24 1/2 after

Credit Suisse First Boston

initiated coverage of the stock with a buy rating and put a price target of 29 on the stock.

ING Barings gave

Ocean Energy

(OEI)

a boost, raising its rating to a buy from a hold. Despite the upgrade, shares of Ocean Energy fell 9/16 to 10 15/16.

Office Depot

(ODP) - Get Report

stumbled 13/16, or 5.3%, to 14 1/2 despite J.P. Morgan rolling out coverage of the shares with a long-term buy rating.

J.P. Morgan started coverage on

OfficeMax

(OMX)

with a market performer rating. Shares of OfficeMax were unchanged at 8 13/16.

Procter & Gamble

(PG) - Get Report

leaped 2 to 100 1/4 after

PaineWebber

upgraded it to attractive from neutral.

Robert Mondavi

(MOND)

tumbled 7/8 to 37 1/8 after Banc of America lowered its rating on the shares to market performer from buy.

Staples

(SPLS)

declined 9/16 to 25 1/2 despite J.P. Morgan initiating coverage on the stock with a buy rating with a 12-month price target of $32.

Strategic Diagnostics

(SDIX)

advanced, or 17.9%, to 5 3/4 after Deutsche Banc Alex. Brown started coverage with an initial buy rating.

Salton

(SFP)

hopped 1 15/16, or 6.4%, to 31 7/8 after PaineWebber initiated coverage of the stock with a buy rating.

Time Warner plummeted 4 9/16, or 6.8%, to 61 5/8 after Merrill Lynch slashed its 1999 earnings estimates to 35 cents a share from 48 cents and its 2000 view to 80 cents from 82 cents.

Transocean Offshore

(RIG) - Get Report

slipped 1/8 to 34 11/16 despite ING raising its rating on the shares to a strong buy from a buy.

Triangle Bancorp

(TGL)

slid 1/8 to 21 3/8 despite

Wachovia Securities

raising the stock's rating to a strong buy form a long-term buy. Yesterday,

Centura Banks

(CBC)

said it plans to acquire Triangle for $608.4 million in stock. Centura shares stumbles 3/16 to 49 11/16.

U.S. Can

(USC)

was up 15/16 to 23 15/16 after Goldman Sachs started coverage with an initial recommended rating.

Westvaco

(W) - Get Report

advanced 7/8 to 30 5/8 after Deutsche Banc Alex. Brown initiated coverage of the stock with a strong buy rating.

Miscellany

Verio

(VRIO)

said it would extend its marketing agreement with

America Online

(AOL)

Europe

to include a subscription-free British service by AOL unit Netscape. The pact calls for Verio to advertise its e-commerce features, which include Web site set-up and maintenance on the free Netscape service. The latest deal expansion increases the companies established relationship involving ventures in the United States and the AOL UK and CompuServe UK units. Shares of Verio hopped 3 1/2, or 9.4% to 40 5/8, while AOL was off 1/4 to 98 3/4.

BioCryst

(BCRX) - Get Report

soared 8 15/16, or 39.2%, to 32 after it said its new flu remedy is both safe and effective, reducing the Influenza A virus in patients tested in preliminary Phase II trials.

Johnson & Johnson

(JNJ) - Get Report

is developing the flu-fighting neuraminidase inhibitor. If approved, BioCryst stands to reap undisclosed future royalties on the drug's sales. J&J was up 1 7/8 to 103 3/16.

eBay

(EBAY) - Get Report

slumped 5 3/8 to 118 7/8 after the online auctioneer responded to protests by reduced a new fee and suspended plans to change bidding policies for some items, the

Journal

reported.

Computer consultant

Gartner Group

(IT) - Get Report

fell 1 to 21 13/16 after said it would assume a restructuring charge for its plan to cut its workforce by 5%, eliminating 175 jobs. The company said that it would report the charge of about $19 million to $22 million in its fiscal fourth quarter which includes the restructuring along with a one-time cash incentive plan for key personnel. The incentive plan carries additional charges of $5 million to $7 million in the fiscal 2000 first quarter and $11 million to $13 million in the second quarter.

SBC Communications

(SBC)

was unchanged at 51 after it announced plans to launch telephone-service "bundles," aiming to compete with similar packages planned by

AT&T

(T) - Get Report

, the

Journal

reported.

Graphics computer maker SGI slipped 1 9/16, or 12.5%, to 10 7/8 after acting CEO Richard Belluzzo resigned to accept a position at another company.

TheStreet.com

wrote about the situation in a story

last night.

Waste Management

(WMI)

declined 5/8 to 22 13/16 after the company named Donald R. Chappel CFO.