The major stock market averages have rebounded sharply off their lows for the day. For a time in the afternoon, they were even driving higher, thanks to bargain hunting investors. After taking the

Nasdaq Composite Index down this morning to 2199, its lowest level since Dec. 1998, traders successfully steered it slightly higher. But the wobbly rally had lately come unglued again, and the Nasdaq was back under the flatline, though not by much.

The

Dow Jones Industrial Average began meandering above break-even at about 1 p.m. but flip-flopped several times before its latest return into the red. Its move off session lows has been bolstered by strength in technology stocks, but its brief rally was even more tenuous than that of the Nasdaq. Breadth on both indices was still negative in late-day action, as corporate profit warnings and concerns about the economy continued to derail investor optimism.

Today's oversold condition on the Nasdaq came courtesy of

Brocade Communications

(BRCD)

, which beat first-quarter earnings estimates last night but offered an unhopeful sales forecast for the rest of the year. In recent trading, the data storage equipment manufacturer was down 4.1% to $42.63.

Yesterday evening, Brocade warned that revenue growth in the second quarter would be "very modest," perhaps flat, and lowered its earnings target for 2001 by 2 cents per share to 60 cents per share. This morning

Morgan Stanley Dean Witter

lowered its rating on the company to "outperform" from "strong buy."

To add to the bad news, data storage competitor

EMC

(EMC)

chimed in this morning, saying that uncertain economic conditions would slow the company's growth in 2001. In recent action, EMC -- the most actively traded stock on the

New York Stock Exchange

-- was off 6.5% to $40.14.

Despite being wide open to the flood of sellers this afternoon, the rest of the data storage sector was holding up pretty well in late-day trading. Shares of

Emulex

(EMLX)

and

QLogic

(QLGC)

, which tumbled in last night's after-hours session, were up 9.3% to $33.88 and 6.6% to $43.25, respectively.

Among chipmakers,

Intel

(INTC) - Get Report

was lately up 0.8% to $31, after being hammered earlier this week on news that the semiconductor manufacturer would implement cost-cutting measures to save money over the next year. Shares of

Xilinx

(XLNX) - Get Report

climbed 4.1% to $45, while

Altera

(ALTR) - Get Report

advanced 2.9% to $26.63. The

Philadelphia Stock Exchange Semiconductor Index

was up 2.4%.

Large-cap technology stocks, which have been pressured all week long, were mostly trading higher in recent action, though some stocks had lately turned down.

Cisco

(CSCO) - Get Report

rose 5.7% to $26.63.

Sun Microsystems

(SUNW) - Get Report

, which was pounded yesterday after

Merrill Lynch

cautioned about the company's inventory pile-up, was lately rallying 9.6% to $21.44. The company holds its midquarter conference call with analysts after the closing bell today.

IBM

(IBM) - Get Report

, which was down yesterday after

Lehman Brothers

raised concerns about enterprise software manufacturers, was lately the strongest component on the blue-chip index, rising 2.6% to $110.25.

Other Dow stocks riding today's bounce include:

Boeing

(BA) - Get Report

, up 2.7% to $61.81,

SBC Communications

(SBC)

, higher 2.1% to $40.50, and

Eastman Kodak

(EK)

, ahead 3.6% to $43.50.

Blue-chip issues weighing down the index were consumer staple stocks. Among them,

Johnson & Johnson

(JNJ) - Get Report

, off 1.3% to $95.70,

Coca-Cola

(KO) - Get Report

, lower 5.0% to $52.15, and

Procter & Gamble

(PG) - Get Report

, behind 2.6% to $74.79.

Sector Watch

As the stock market began its broad-based ascent in afternoon trading, several groups have risen along with it.

Here's the roundup: The

American Stock Exchange Broker/Dealer Index

gained 0.5%, the

Philadelphia Stock Exchange Computer Box Maker Index

added 1.6%, the

American Stock Exchange Networking Index

tacked on 1.7% and the

American Stock Exchange Oil & Gas Index

lifted 0.3%.

Sectors that were down as trading session neared the finish line: The

S&P Retail Index

lowered 1.3%, the

Morgan Stanley Consumer Index

decreased 1.5%,

TheStreet.com Internet Sector

shed 2.7% and the

Morgan Stanley Cyclical Index

fell 0.9%.

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Bonds/Economy

After moving higher this morning,

Treasury prices were falling in the afternoon as equities turned higher.

The benchmark 10-year

Treasury note lately was down 3/32 to 98 25/32, raising its yield to 5.158%.

In economic news,

initial jobless claims

(

definition |

chart |

source

), which track the number of people applying for unemployment benefits for the first time, rose to 348,000 in the week ended Feb.17. Although this is 4,000 more than the prior week's revised number, the figure is substantially lower than the 355,000 that economists had predicted in a

Reuters

poll. The four-week moving average, however, climbed for the third consecutive week, to 350,750. Still, recent figures suggest that the string of layoffs may be drawing to a close.

The index of

leading economic indicators

(

definition |

chart |

source

), which forecasts economic activity more than half a year in advance, rose by 0.8% in January after having fallen for two consecutive months. The anticipated rise had been for 0.3%.

The

Help-Wanted Index

(

definition |

chart |

source

) fell by 3 points, to 76, last month. The gauge, which had a base value of 100 in 1987, tracks jobs openings in newspapers nationwide.

The

Consumer Comfort Index

(

definition |

chart ), which measures how consumers view the economy's direction and their participation in it, fell by a point, to 19, for the week ended Feb. 18.

Finally, the surplus in the

federal budget

(

definition |

chart |

source

) rose to $76.38 billion in January from $32.67 billion in December. It is also $14.2 billion higher than the number from a year ago.

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