After shaping up as a veritable repeat of yesterday's action -- with rising cyclical stocks leading blue-chip averages to records while techs faltered -- major proxies took a nosedive in the final hour.

After rising as high as 10,935.37, the

Dow Jones Industrial Average

stumbled below break-even before rebounding in the final minutes to close up 13.74, or 0.1%, to an all-time best of 10,845.45.

IBM

(IBM) - Get Report

was the Dow's biggest negative influence, falling 3.3% after rising an "I can't believe it's Big Blue" 27% from April 19 through yesterday's close.

American Express

(AXP) - Get Report

was also a substantive drag on the index, down 4.1%.

The

S&P 500

closed down 11.89, or 0.9%, to 1350.91 after rising as high as 1368.76. Weakness in the high-tech, financials and pharmaceuticals hampered the index, overshadowing big gains in energy.

Overall, banking stocks were modest losers; the

Philadelphia Stock Exchange/KBW Bank Index

slid 1%. But brokerages such as

Charles Schwab

(SCH)

and

Donaldson Lufkin & Jenrette

(DLJ)

were harder hit; the

American Stock Exchange Broker/Dealer Index

fell 4%.

Meanwhile, the

American Stock Exchange Pharmaceutical Index

slid 3.3%.

Technology stocks of all stripes fell for a second-straight session and a modest midday decline accelerated into the close. The

Nasdaq Composite Index

fell 52.04, or 2%, to 2550.37 while

TheStreet.com Internet Sector

index lost 39.07, or 5.6%, to 657.90.

The Nasdaq's biggest bellwethers, save unchanged

MCI WorldCom

(WCOM)

, each fell at least 1.8%; several lost more than 3%. The

Nasdaq 100

shed 2.6% while the

Morgan Stanley High-Tech 35

lost 3.2%.

Internet leaders also tumbled even though

America Online's

(AOL)

earnings

last night bested expectations. (Note to TV pundits shocked like

Mean Gene Okerland

by this turn of events: Please refer to the section entitled "Buy the Rumor, Sell the News" in your

Wall Street Cliches

handbook.)

Speaking of quarterly results,

Amazon.com

(AMZN) - Get Report

reported a pro forma first-quarter loss of 23 cents a share after the close vs. the 21-analyst forecast for a loss of 29 cents and a year-ago loss of 7 cents. Ahead of the news, Amazon.com fell 6%. Its fall continued in after-hours action on disappointment with quarterly revenue.

Beyond tech,

McKesson HBOC

(MCK) - Get Report

tumbled 47.3% after restating earnings.

Rather than any specific event, "a combination of Internet stocks getting beat up like they were plus the fact you had the

Alcoas

(AA) - Get Report

and

Dow Chemicals

(DOW) - Get Report

and things like that so strong" accounted for the swoon, said Ned Collins, executive vice president of U.S. stocks at

Daiwa Securities America

. "Certain people started saying, 'If stocks and the stock market really are a leading indicator and telling us where the economy is going to be six months from now, the

Fed

doesn't have any choice but to tighten.' That wave swept the Street for a few minutes."

Nonetheless, "just the fact

Microsoft

(MSFT) - Get Report

, Amazon,

Yahoo!

(YHOO)

-- a lot of the leaders -- were all under the pressure" contributed to the slide, Collins said. "They're the guys that have been leading us up. Maybe momentum players trading on the Internet are getting squeezed a little with margin calls, so they sell the good stuff. But I'm speculating. This whole thing is an interesting phenomenon and I don't know anyone who has a real good handle on it."

In

New York Stock Exchange

trading, 951.8 million shares were exchanged while advancers led losers 1,730 to 1,279. In

Nasdaq Stock Market

activity, 1 billion shares were exchanged -- its 17th-straight billion-plus session -- while losers led 2,145 to 1,938. New 52-week highs led new lows 78 to 26 on the Big Board and by 78 to 50 in over-the-counter trading.

Cyclicals Alone on Higher Ground

The Dow's record was fostered by strength in heavy-industry heavies such as Alcoa,

Chevron

(CHV)

,

DuPont

(DD) - Get Report

,

Exxon

(XON) - Get Report

and

3M

(MMM) - Get Report

. The

Morgan Stanley Cyclical Index

rose 2.7%, the

S&P Chemical Index

climbed 4.8% and the

Philadelphia Stock Exchange Gold & Silver Index

rose 4.4%.

With crude prices pushing above $18.50 a barrel, nearly all major oil producers and energy-service firms rallied smartly. The

American Stock Exchange Oil & Gas Index

gained 3.5% while the

Philadelphia Stock Exchange Oil Service Index

gained 7.5%.

"We think the price of oil will trade in the $16 to $18 a barrel range," said Buzz Hussey, managing director at

Dain Rauscher Wessels

in Dallas. "As it begins to reflect some stability there, I think the stocks will continue to move up. I think we're seeing that oil has made its move and the stocks, while they've moved some, can move more from here."

Hussey, long bullish on energy, said "skepticism" about oil prices and short selling in oil stocks "undoubtedly" contributed to the gains today. "There's been a lot of shorts involved at lower prices. There's been a lot of aggressive, speculative money that's flown in and out, buy and sell. When Internet stocks don't have a good day they go to oil-service stocks for action."

Atwood Oceanics

(ATW)

, for example, recently had total short interest of 338,000 vs. a float of 8.9 million, he said. "That does have some effect." Atwood rose 1.9%.

As for the bigger picture, it's unclear what the ferocity of the rotational process signals, Hussey conceded. "But this kind of speculative rotation does often accompany a topping action," he said. "There's still healthy skepticism as to how high this market can go and there's a lot of money out there, but the aggressive money is not paying attention very much to risk."

While far from bearish, the veteran strategist recommended investors shift some assets into "conservative stocks that won't fall apart if the market takes a hit."

"Clearly it's a high-risk game but it can be extremely profitable," he continued. "It's important not to do too much of a good thing, because you can get into serious trouble. Everyone is focused on making money but while it's good to make it, it's even better to keep it."

Among other indices, the

Dow Jones Transportation Average

rose 34.26, or 1%, to 3631.72; the

Dow Jones Utility Average

gained 2.24, or 0.7%, to 307.95; the

Russell 2000

dipped 1.63, or 0.4%, to 433.53; and the

American Stock Exchange Composite Index

added 3.62, or 0.5%, to another record, 777.69.

The price of the 30-year Treasury bond fell 22/32 to 95 4/32, its yield rising to 5.59%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 37.78 to 7101.07 and the

Mexican Stock Exchange IPC Index

jumped 75.77, or 1.4%, to 5458.16.

Wednesday's Company Report

By Heather Moore
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.

)

Shares of drug wholesaler McKesson HBOC plummeted 31 1/4, or 47.5%, to an annual low of 34 1/2 on 41.6 million shares after the company restated its fourth-quarter earnings to 56 cents a share from 62 cents, citing improper recording of software sales. McKesson also restated its fiscal 1999 earnings to $1.97 from $2.06, and revised its fiscal 2000 goal downward to $2.50 from $3. A shareholder lawsuit against the company was announced this afternoon. Silently giving lectures in the obvious,

Morgan Stanley Dean Witter

downgraded the stock to neutral from outperform,

BT Alex. Brown

lowered it to market perform from buy and

Merrill Lynch

cut it to near-term neutral from buy.

Mergers, acquisitions and joint ventures

First Liberty Financial

(FLFC)

scored 8 9/16, or 38.1%, to an all-time high of 31 1/16 on news that North Carolina bank

BB&T

(BBT) - Get Report

is buying it in a $500 million stock swap. First Liberty shareholders will get 0.85 of a BB&T share for each First Liberty share. BB&T lowered 1/4 to 39.

FirstPlus Financial

(FP)

exploded up 1 1/2, or 160%, to 2 7/16 on rumors of a takeover.

Specialty chemicals maker

Lawter International

(LAW)

shot up 3 1/16, or 34.3%, to an annual high of 12 on news

Eastman Chemical

(EMN) - Get Report

will buy it for $400 million in cash, or $12.25 a share, and about $100 million in debt assumption. Eastman Chemical picked up 1 to 50 15/16.

Italy's

Luxottica

(LUX)

swelled 2 9/16, or 19.8%, to 15 1/2 after agreeing to buy

Bausch & Lomb's

(BOL)

sunglasses business. Bausch & Lomb slipped 1 to 78.

Merkert American

(MERK)

slid 1 3/8, or 12.9%, to an all-time low of 9 1/4 after agreeing to buy

Richmont Marketing Specialists

for 6.7 million shares. The company said it expects to incur restructuring charges in the second and third quarters from the transaction.

Oneida

(OCQ)

, the world's largest manufacturer of stainless steel and silver-plated flatware, excelled 4 3/8, or 20.6%, to 25 5/8 after its board rejected an unsolicited takeover offer of $30 a share from glassware maker

Libbey

(LBY) - Get Report

. Libbey slipped 1/4 to 29 5/16.

Shares of auto parts manufacturer

Walbro

(WALB)

soared 7 5/16, or 59.7%, to an annual high of 19 9/16 after the U.K.'s

TI Group

said it will buy the auto parts manufacturer for about $570 million in cash and assumed debt. Walbro shareholders will get $20 cash for each Walbro share under the deal.

Earnings/revenue reports and previews

America Online dropped 10, or 6.5%, to 143 even after last night reporting third-quarter earnings of 11 cents a share, beating the 34-analyst estimate by 2 cents and moving up from the year-ago 4 cents. The numbers don't include results from

Netscape

, which AOL acquired March 17 in a pooling-of-interests transaction, or other one-time items. TheStreet.com examined the report in a

story last night. Today,

Donaldson Lufkin & Jenrette

upped its price target for the stock to 200 from 125 a share.

Bowater

(BOW)

lifted 5 7/8, or 12.7%, to 52 after reporting first-quarter earnings of 34 cents a share, 24 cents higher than the 11-analyst outlook but behind the year-ago 59 cents. BT Alex. Brown raised the stock to buy from market perform.

iVillage

(IVIL)

gave up 9 1/2, or 10.1%, to 85 after posting a pro forma first-quarter loss of 96 cents a share vs. a loss of $4.40 in the year-ago period. The Web-based women's network said membership grew 64% to 1.6 million from the fourth quarter.

Metamor Worldwide

(MMWW)

rocketed up 3 7/16, or 21.6%, to 19 1/2 after last night topping first-quarter earnings estimates by a penny with a profit of 33 cents a share.

Steris

(STE) - Get Report

skidded 7 3/4, or 32.5%, to an annual low of 16 1/8 on worries that fourth-quarter earnings will fall below expectations and that revenue growth will slow. The company also said CFO Donald F. Smith, who took the post in February, resigned. BT Alex. Brown lowered the stock to market perform from buy.

In other earnings news:

Offerings and stock actions

Digital communications firm

Razorfish

(RAZF)

advanced 13 5/8, or 40.8%, to 46 3/8 in its second day of trading.

Analyst actions

FDX

(FDX) - Get Report

slid 6 5/8, or 5.8%, to 107 7/16 after

Schroder

downgraded the stock to perform in line from outperform significantly.

Salomon Smith Barney

, meanwhile, started coverage with an outperform.

Golden State Vintners

(VINT)

tumbled 3 3/4, or 36.1%, to an all-time low of 6 21/32 after

Goldman Sachs

cut the stock to market perform from its recommended list. Yesterday, the company said its second-half earnings would fall short of expectations due to softness in the California bulk wine market.

Miscellany

Scios

(SCIO)

plunged 5 29/32, or 61%, to 3 13/16 after saying the

Food and Drug Administration

didn't approve its new drug application for Natrecor for the treatment of acute episodes of congestive heart failure.

"Whoa ... we've got a rocket!" wrote one investor on

Yahoo!'s message board for

U.S.-China Industrial Exchange

(CHDX)

, an obscure distributor medical and industrial equipment in China and Hong Kong. Shares of the company, known as Chindex, rose 4 3/8, or 79.6%, to 9 15/16 on no discernible news.