Dow Bounces Back to Close Higher; Nasdaq Finishes Lower

Updated from 3:01 p.m. EDT

Blue-chips rebounded in afternoon trading to close higher, but tech stocks finished Wednesday's session lower. The

Dow Jones Industrial Average

ended up 35.78 points, or 0.4%, to 10,033.27. The

Nasdaq

was down 11.79 points, or 0.7%, to 1758.99, and the

S&P 500

was down 1.20 points to 1131.74.

Compaq

(CPQ)

was the most active stock on the

New York Stock Exchange

, falling 67 cents, or 6.1%, to $10.41 in the aftermath of its plan to merge with

Hewlett-Packard

(HWP)

. H-P dropped 66 cents, or 3.5%, to $18.21.

Texas Instruments

(TXN) - Get Report

shed $1.26, or 3.9%, to $30.84 after reaffirming its third-quarter guidance.

Motorola

(MOT)

was off $1.09, or 6.2%, to $16.40 after Merrill Lynch downgraded the mobile phone maker to neutral from accumulate.

Alcatel

(ALA)

dropped $1.08, or 7.4% to $13.62 after offering a grim outlook on the telecom industry.

Portugal Telecom

(PT) - Get Report

traded lower after announcing Tuesday that it has withdrawn its offer to buy out the remainder of

Telesp Celular

(TCP) - Get Report

. The stock had a nice run-up for most of the day, but lost 16 cents, or 2.4% to $6.45. Telesp Celular dropped $3.91 or 33%, at $8.04.

In Treasuries, the 10-year note was recently down 2/32 to 100 9/32, yielding 4.96%. As for currencies, the dollar was stronger against the yen but fell against the British pound.

Overseas, European stocks traded lower with telecom leading the decline. In London, the FTSE 100 fell 64 points, or 1.2%, to 5316. Japan's Nikkei 225 closed down 174 points, or 1.6%, to 10,599. Hong Kong's Hang Seng also fell sharply, losing 194 points, or 1.8% to 10,943.