Internet and technology stocks today managed to recoup some of the losses they suffered in

yesterday's selloff.

The

Nasdaq Composite Index

rallied 64.16, or 2.7%, to 2409.77. The Nasdaq Comp fell 5.6% yesterday.

Tech giant

Microsoft

(MSFT) - Get Report

, which reported after the close third-quarter earnings of 35 cents a share, was most active on the

Nasdaq Stock Market

, with 53.3 million shares changing hands. The

First Call

22-analyst consensus estimate projected earnings would come in at 32 cents a share.

TheStreet.com Internet Sector

index surged 35.14, or 6.3%, to 595.95. It fell 16% yesterday.

The

Dow Jones Industrial Average

gained 8.02, or 0.1%, to 10,448.55.

The

S&P 500

advanced 16.69, or 1.3%, to 1306.17. The

Russell 2000

rose 2.93, or 0.7%, to 415.34.

Cyclicals, which turned in a solid performance yesterday, tumbled today. The

Morgan Stanley Cyclical Index

fell 2.2%.

Oil and oil service stocks, which rallied yesterday, fell. The

Chicago Board Options Exchange Oil Index

surrendered 3%. The

Philadelphia Stock Exchange Oil Service Index

dropped 3.9%.

The 30-year Treasury bond was up 3/32 to 96 5/32, yielding 5.514%.

On the

New York Stock Exchange

, decliners beat advancers 1,670 to 1,368 on 975 million shares. On the Nasdaq, winners beat losers 2,055 to 1,943 on 1.139 billion shares.

On the NYSE, 36 issues set new 52-week highs while 34 touched new lows. On the Nasdaq, 78 issues set new lows while new highs totaled 21.

On the Big Board,

America Online

(AOL)

was most active, with 42.6 million shares changing hands. It was up 13, or 11.2%, to 128 7/8.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

3:03 p.m.: Tech, Internet Issues Retrace Some of Monday's Losses

Technology and Internet stocks have managed to repair some of the damage of yesterday's shattering selloff while some of yesterday's winners were surrendering their recent gains.

The

Nasdaq Composite Index

was up 53, or 2%, to 2399, making up some of the ground it gave up in

yesterday's 5.6% freefall.

The

Dow Jones Industrial Average

was down 9 to 10,432. The

S&P 500

was up 14 to 1304. The

Russell 2000

was up 3 to 415.

"All in all, the market looks like it's in great shape," said Dan Marciano, head of trading at

First Albany

.

Marciano said the market is enjoying a decent rally overall, pointing to the surge in the Comp, utilities, and banks.

TheStreet.com Internet Sector

index was up 23 to 584. The index swooned 16% yesterday.

"I think they washed a lot of these things out," said Marciano of the Internet stocks in yesterday's selloff. He said probably now when those stocks advance they probably won't run up with the same ferocity as they have in the past.

Oil and oil service stocks were giving up a chunk of their recent gains. The

Philadelphia Stock Exchange Oil Service Index

was down 4%, while the

Chicago Board Options Exchange Oil Index

was down 3%.

Although transportation and oil and gas stocks were taking a hit today, Marciano noted that those sectors have made tremendous moves over the last month.

He said his guess was that either this quarter or next, when oil and oil service companies report earnings, year over year the comparisons are going to be great.

Marciano noted that earnings are coming in pretty good overall.

Drug stocks advanced after getting buried yesterday. The

American Stock Exchange Pharmaceutical Index

was up 3%.

The

Philadelphia Stock Exchange Forest & Paper Products Index

was down 2% and the

Morgan Stanley Cyclical Index

was also off 2%.

The 30-year Treasury bond was up 4/32 to 96 7/32, yielding 5.51%.

On the

New York Stock Exchange

, decliners were beating advancers 1,679 to 1,294 on 794 million shares. On the

Nasdaq Composite Index

, winners were beating losers 1,970 to 1,910 on 924 million shares.

On the NYSE, 30 issues had set new 52-week lows while 33 had touched new highs. On the Nasdaq, 74 stocks had set new lows while 18 touched new highs.

On the Big Board,

America Online

(AOL)

was most active, with 36 million shares changing hands. It was up 11 3/16, or 10%, to 127 1/4

On the Nasdaq,

Microsoft

(MSFT) - Get Report

was most active, with 41 million shares changing hands. It was up 2 5/17, or 3%, to 83 3/8. Mister Softee is expected to report earnings today after the close.

2:03 p.m.: Nasdaq Remains Higher After Monday's Tumble

The

Dow Jones Industrial Average

was the lone major market average in the red this afternoon as the tech-laden

Nasdaq Composite Index

continued higher, up 2%.

The Dow was down 22 to 10,418. The Nasdaq Comp was up 48 to 2394.

The

S&P 500

was up 13 to 1302. The

Russell 2000

was up 3 to 416.

TheStreet.com Internet Sector

index was up 32 to 593.

The 30-year Treasury bond was down 4/32 to 96 1/32, yielding 5.53%.

On the

New York Stock Exchange

, decliners were beating advancers 1,678 to 1,259 on 679 million shares. On the

Nasdaq Stock Market

, losers were beating winners 1,948 to 1,842 on 783 million shares.

On the NYSE, 28 issues had set new 52-week highs while 27 had touched new lows. On the Nasdaq, 65 issues had set new lows while new highs totaled 15.

On the Big Board,

America Online

(AOL)

was most active, with 31 million shares changing hands. It was up 13 11/16, or 12%, to 129 9/16.

On the Nasdaq,

Microsoft

(MSFT) - Get Report

was most active, with 35 million shares changing hands. It was up 1 1/2 to 82 5/8.

Sector Focus: Transportation

The

Dow Jones Transportation Average

was down 2%, giving up a chunk of its recent sizable gains. Airline stocks in the average are mostly lower.

UAL

(UAL) - Get Report

, parent of

United Airlines

, posted first-quarter net income of $1.54 a fully distributed share, much better than the

First Call

11-analyst prediction of $1.39. UAL was down 2 1/8 to 81 5/8.

Northwest Airlines

(NWAC)

reported a loss of 58 cents a share, beating the First Call 11-analyst estimate of a loss of 74 cents, but down from the year-ago profit of 66 cents. Northwest was up 1/2 to 30 15/16.

1:09 p.m.: Midday Musings: Nasdaq Surges, For Now, in Volatile Rebound Session

12:02 p.m.: Nasdaq Climbs Back Toward Session Highs in Volatile Trading

Cyclicals are suddenly looking sickly, but tech favorites were having a hard time benefiting this morning. Funds are rotating back into growth stock favorites such as technology and drugs after

yesterday's debacle, but many investors appear reluctant to expose themselves to another potential pistol-whipping.

Market players expect more indecision in the afternoon and coming days.

"Even with all the blatant and transparent rotation over the past five to seven trading days, a lot of investors seem to be playing a guessing game right now," said Brian Belski, chief investment strategist at

George K. Baum

. "Such a scenario likely explains the excess volatility that is causing the wild swings and emotional trading patterns taking place lately."

As high noon approached on Wall Street, however, some gunslingers were getting their nerve up once again.

The

Nasdaq Composite Index

was lately up 30 to 2376 and reproaching its initial high of 2379.90 after bouncing off a subsequent drop to 2329.87.

Dell

(DELL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

have been the best performers among tech bellwethers throughout the session, helping the

Nasdaq 100

rise 2%.

Meanwhile,

Microsoft

(MSFT) - Get Report

has improved in the past hour. Ahead of its profit report, due after the close, the software behemoth was lately up 2%. Mr. Softee is expected to post third-quarter profits of 32 cents a share vs. 25 cents a year ago, according to the 21-analyst consensus.

Strength in the aforementioned helped the

S&P 500

climb 9 to 1299. The index was also being aided by resurgent drug makers, which rallied after steep declines yesterdays. Stronger-than-expected earnings from

Johnson & Johnson

(JNJ) - Get Report

and an in-line but promising report from

Schering-Plough

(SGP)

helped reinvigorate the group. The

American Stock Exchange Pharmaceutical Index

was up 3%.

Cyclical stocks were struggling, however: The

Morgan Stanley Cyclical Index

was down 2%.

Weakness in

Chevron

(CHV)

and

United Technologies

were weighing on the

Dow Jones Industrial Average

, lately down 57 to 10,384. Chevron was down 5% after being downgraded by

Donaldson Lufkin & Jenrette

.

The blue-chip index was also hampered by weakness in

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

, demonstrating the restraint of some tech investors.

Internet favorites were lately on the upswing, however, after overcoming some mid-morning hesitancy.

TheStreet.com Internet Sector

index was up 15 to 576.

The Russell 2000 was lately up 1 to 413 after falling as low as 410.44 early on.

No Surprise At Wheat First

While some market players were caught off guard by the market's sudden reversal yesterday, Don Hays, director of investment strategy at

Wheat First Union

has been expecting a downturn for some time. Since turning decidedly defensive in mid-February, Hays has become increasingly suspicious.

"This is the season when flowers bloom and bull markets stall," Hays wrote in a report yesterday. "April is a big month for our market scenario, and as we enter the third week of the pivotal month, indeed the bullish vibes are still very evident, rejoicing the glad tidings of the first quarter. But as evidenced by the market action, market trends began to change substantially last week."

While other market watchers rejoiced at the broadening of interest away from the biggest market-cap growth stocks, Hays notes they have been the fuel in the S&P 500's rise. "As a result, our asset allocation model, as well as everyone else's, has been based upon the conditions of the S&P 500," he wrote. "That has produced the highest overvaluation of our model in the history of the U.S. stock market."

In a nutshell, Hays foresees large-cap growth stocks at the end of a classic "bull-bear" cycle similar to that experienced by Japan's

Nikkei

in the 1980s; emerging markets, which went from boom in 1993 to bust in 1997-1998; and small-caps, which peaked in third-quarter 1997 after a period of strong performance.

"The large-cap growth sector (including technology and Internets) is the last sector still in its old bull market," the veteran market watcher said. " Just looking at this sector we have all the attributes of a climax top that existed in Japan in 1989 -- record valuations, huge public participation and enthusiasm, parabolic price moves, growing selectivity and invincible bullish sentiment. All that is missing for this sector to begin a first bear phase is a trigger. We do not know yet what it will be, but it may not take much in the way of bad news when expectations are so high."

--

Aaron L. Task

11:00 a.m.: Market Struggles as Stocks Fall From Session Highs

Rally or ambush? That's the question traders and investors were asking themselves this morning as tech stocks sought to revive themselves after

yesterday's thrashing. After an hour of trading, those long the market were beginning to look for booby traps as early gains evaporated.

As many players expected, investors initially forsake the recently torrid cyclical stocks for perceived bargains in techland. Drug makers were also recovering from their recent losses, while financials continued to exude strength thanks to strong earnings at

Chase

(CMB)

and a 3-for-2 stock split announcement by

Citigroup

(C) - Get Report

. But groups initially in favor slackened while the laggards weakened further.

The

Dow Jones Industrial Average

was fading as the morning progressed, lately down 50 to 10,390. Recent favorites

Chevron

(CHV)

and

United Technologies

were pacing the Dow's retreat. Cyclicals overall were recoiling from recent gains -- the

Morgan Stanley Cyclical Index

was down 2%.

Coming off one of its worst days in history, the

Nasdaq Composite Index

was the best performer of major indices in the early going, rising as high as 2379.90. But the tech-befuddled index was off its session highs, last up 5 to 2351.

Bellwethers such as

Dell

(DELL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

led the initial bounce, but were struggling to sustain the forward momentum. The

Nasdaq 100

was up fractionally.

Ahead of its profit report, due after the close,

Microsoft

(MSFT) - Get Report

was up fractionally. The software colossus is expected to post third-quarter profits of 32 cents a share vs. 25 cents a year ago, according to the 21-analyst consensus.

Internet stalwarts also hit a pothole on the comeback trail. With

America Online

(AOL)

and

Amazon.com

(AMZN) - Get Report

notably retreating from early gains,

TheStreet.com Internet Sector

index was down 8 to 523 after rising as high as 579.23 early on.

Elsehwere,

Inktomi

(INKT)

was up 15% and

DoubleClick

(DCLK)

was higher by 11%, after

Goldman Sachs

upped its recommendation on each to the recommended list from market outperform.

E*Trade

(EGRP)

was up 4 3/4 to 78 7/8 after posting a narrower-than-expected second-quarter loss.

But in the Net-stocks-are-still-dangerous category,

Network Associates

(NETA)

was down 32% after

last night posting a disappointing first-quarter earnings report and a dim outlook for the second quarter.

The

Russell 2000

was lately down 1 to 411.

--

Aaron L. Task

10:00 a.m.: Stocks Mostly Higher After Monday's Collapse

The market's major barometers were mostly higher early on as technology and Internet stocks begin to bandage the heavy losses they suffered

yesterday while a flood of key earnings reports hit Wall Street.

The

Nasdaq Composite Index

was up 23 to 2369.

TheStreet.com Internet Sector

index was up 4 to 565.

The

Dow Jones Industrial Average

was down 13 to 10,428. The

S&P 500

was up 4 to 1294. The

Russell 2000

was up 2 to 414.

The 30-year Treasury bond was down 4/32 to 95 31/32, yielding 5.53%.

Philip Morris

(MO) - Get Report

recently posted first-quarter operating earnings of 80 cents a share, in line with the 12-analyst estimate. It was up 3/4 to 33 7/8.

Most Up at Open -- NYSE

Citigroup (C) - Get Report, up 3 1/4 to 73

: Citigroup set a 3-for-2 stock split.

Morgan Stanley Dean Witter

raised its 12-month price target on the stock to $87 from $79.

Most Up at Open -- Nasdaq

DoubleClick (DCLK) , up 9 5/8 to 113 5/8

:

Goldman Sachs

upgraded the company to its recommended list.

Most Down at Open -- NYSE

Telebras (TBH) , down 2 11/16 to 84 5/8

.

Most Down at Open -- Nasdaq

Go2Net (GNET) , down 10 1/4 to 136 1/2

.

--

Brian Louis