SAN FRANCISCO -- (Read in the voice of

Howard Cosell

): Stocks and bonds answered the opening bell in fine form this morning after the

CPI

provided more evidence inflation -- that peril of financial assets -- remains subdued. But -- THERE! RIGHT THERE! -- a right hook from

European Central Bank

President

Wim Duisenberg

put bonds on their backside. The 30-year Treasury bond avoided an ignominious defeat but ended with a virtual draw, down 1/32 with its yield unchanged at 5.92%.

The stock market got its knees buckled by the blow but stayed upright through that opening round. Then, in a display of pugilistic prowess unmatched in the annals of history (or at least since

Friday) the market regained its form as bonds climbed off the canvas, punching its way out of trouble to retain the championship belt, despite giving away some later rounds. The

Nasdaq Composite Index

-- look at that little Nasdaq go! -- and the

S&P 500

each scored records. The

Dow Jones Industrial Average

closed modestly higher but a new high for the blue-chip gauge was not to be, as they say.

(Read in whatever voice you choose): Tech plays such as

Amazon.com

(AMZN) - Get Report

,

Cisco

(CSCO) - Get Report

,

Hewlett-Packard

(HWP)

and

Motorola

(MOT)

aided market proxies.

Although many of its best-known bellwethers finished lower -- notably

Sun Microsystems

(SUNW) - Get Report

and

Apple

(AAPL) - Get Report

-- the Nasdaq Comp rose 21.24, or 0.8%, to 2839.37. The tech-braised index notched its eighth record in 11 trading days.

"I think the environment for tech is getting better," said Lou Mazzucchelli, an analyst at

Gerard Klauer Mattison

. "You're seeing strong continued PC demand, Intel is talking about good demand, DRAM prices are firming up, Motorola had a good report for other semis. We had scare when Taiwan and the Chinese started yelling at each other, but outside those kind of macro events we're in pretty good shape. It's a healthy environment."

The Comp was aided by second-tier names such as

Rambus

(RMBS) - Get Report

, up 17.8% after posting better-than-expected profits

last night. Similarly

SanDisk

(SNDK)

rose 26.8% after beating consensus and receiving an upgrade from

Merrill Lynch

as well.

In addition to techs, the S&P 500 was fueled by a decent advance by financials and energy stocks. The

Philadelphia Stock Exchange/KBW Bank Index

and

American Stock Exchange Broker/Dealer Index

each rose more than 1%, as did the

American Stock Exchange Oil & Gas Index

. The S&P 500 closed up 11.45, or 0.8%, to 1409.62, establishing a new high in the process.

The Dow industrials rose as high as 11,217.76 then fell within single-digits of breakeven in the final hour of the session before rebounding toward the close. The index ended up 38.31, or 0.3%, to 11,186.41.

H-P was far and away the Dow's best performer, rising 4.2%, while

American Express

(AXP) - Get Report

and

Coca-Cola

(KO) - Get Report

also aided the proxy. Coke rose 3.4% despite posting earnings down sharply from last year and merely in line with expectations as the company gave guidance the worst was has passed.

Broad market participation was evident as the

Russell 2000

gained 4.34, or 0.9%, to 465.80, a 52-week high although well shy of its all-time best of 491.41, set April 21, 1998. Meanwhile, the

American Stock Exchange Composite Index

gained 8.73, or 1.1%, to a record 821.73 while the

Value Line New Arithmetic Index

rose 7.20, or 0.7%, to an all-time best 1066.61.

The big disappointment of the session was Internet stocks (save Amazon.com).

TheStreet.com Internet Sector

index fell 7.49, or 1.1%, to 649.71.

Network Associates

(NETA)

shed 9.5% as takeover rumors faded (for one day, at least). Meanwhile,

Inktomi

(INKT)

shed 3.4% -- despite posting a loss last night a penny narrower than expectations -- and

MindSpring Enterprises

(MSPG)

lost 5.1%.

Can You Confirm?

In

New York Stock Exchange

trading, 805.2 million shares were exchanged while advancers led declining stocks 1,827 to 1,053. In

Nasdaq Stock Market

action 1.12 billion shares traded while gainers led 2,267 to 1,715. New 52-week highs bested new lows 131 to 33 on the Big Board and by 215 to 33 in over-the-counter trading.

"In the past few years when we've punched to new highs, volume confirms," said Steven Goldman, market strategist at

Weeden

in Greenwich, Conn. "We're not seeing a new peak in volume here. I question the

stock market's potential from here given the valuations and possibility that bonds may not be starting a sustainable trend higher."

Like many, Goldman expressed concern the bond market failed to rally substantially despite benign economic news for a second straight day.

"The bond market is feeling we're still showing continued

economic strength. Stock prices lead the charge higher, boosting consumer confidence which will lead to spending, which will curtail the bond market," he said. "It's not happening today, but continued strength will lead to higher interest rates which could cause concern for stock prices."

The strategist said it is "premature" for the stock market to share bonds' concerns, clearing the way for today's gains. But "within another week or two, trading will turn choppy as we await the next

Fed

meeting," he said. "With further data due out and lingering concerns, stocks are priced more or less for perfection."

Among other indices, the

Dow Jones Transportation Average

fell 24.48, or 0.7%, to 3397.03, weighed down by

US Airways

(U)

, which fell 7.8% after unveiling its second profit warning in as many months. Elsewhere, the

Dow Jones Utility Average

rose 0.21, or 0.1%, to 320.57.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 39.62 to 7292.70 and the

Mexican Stock Exchange IPC Index

hopped up 41.08 to 5875.97.

Thursday'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.

)

Coca-Cola popped up 2 1/8 to 64 after reporting second-quarter earnings of 38 cents a share, in line with the 16-analyst estimate but down from the year-ago 48 cents. The year-ago period includes a gain of 3 cents related to the sale of the company's bottling operations in northern and central Italy, and a provision of 2 cents a share from the impairment of certain assets in the global manufacturing system.

On the flip side, US Airways shed 3 7/16, or 7.8%, to 40 7/8 after saying it won't meet earnings estimates for the second half of the year. The airline was expected to earn $1.66 a share in the third quarter and $1.62 in the fourth quarter. The carrier said its results have been hurt by recent revenue trends, and higher labor and fuel costs.

Mergers, acquisitions and joint ventures

ContiFinancial

(CFN)

collapsed 2 5/16, or 58.7%, to an all-time low of 1 5/8 after last night saying it ended merger talks with

Residential Funding

, a unit of

General Motors'

(GM) - Get Report

General Motors Acceptance

.

SpecTran

(SPTR)

slammed down 2 17/32, or 22.3%, to 8 7/8 even after

Lucent

(LU)

agreed to buy it for $64 million. Lucent rose 2 5/8 to an all-time high of 77 5/8.

Viasoft

(VIAS)

swelled 2 7/32, or 34.8%, to 8 19/32 after

Compuware

(CPWR)

agreed to buy the company for $9 a share in cash. Compuware picked up 1/2 to 35.

Earnings/revenue reports and previews

Adhering to the sell-the-news trend this earnings season, Apple sliced off 2 1/2 to 53 1/4 after last night posting second-quarter earnings of 69 cents a share, beating the 19-analyst estimate by a nickel and moving up from the year-ago 65 cents. The Mac maker, whose shares ran up ahead of the announcement, also said it will buy back $500 million in stock.

Avis Rent A Car

(AVI)

revved up 1 11/16, or 5.9%, to 30 1/8 after last night topping second-quarter earnings estimates by a dime with a profit of 85 cents.

BankBoston

(BKB)

added 1 13/16 to 50 13/16 after posting second-quarter earnings of 83 cents a share, including a gain for the sale of a minority stake in Partners First and a valuation writedown for noninterest income related Partners. The 19-analyst view called for earnings of 77 cents vs. the year-ago 80 cents.

DSP Communications

(DSP)

skidded 6 1/8, or 19.6%, to 25 1/16 after last night posting second-quarter earnings in line with the estimate of 22 cents a share. Today, Merrill Lynch lowered the stock to near-term neutral from accumulate, maintaining a long-term buy.

LandAmerica Financial

(LFG)

declined 3 5/16, or 11.7%, to an annual low of 24 15/16 after last night saying it sees second-quarter earnings of 78 cents to 88 cents a share due to a shift in revenue mix to the company's lower-margin agency business. The two-analyst view called for $1.27 vs. the year-ago $1.47. Today,

Donaldson Lufkin & Jenrette

lowered the stock to market perform from buy.

McKesson HBOC

(MCK) - Get Report

rose 3/8 to 31 3/8 despite last night restating earnings from continuing operations for the last there years. It cut earnings for fiscal 1999 by $152.2 million, or 53 cents a share; for 1998, the company lowered earnings by $25.8 million, or 9 cents a share; for 1997, it lowered earnings by $13.5 million, or 5 cents a share. McKesson lowered its revenue for the past three fiscal years by a total of $327.4 million. Today,

Banc of America Securities

cut the stock to hold from buy.

Rambus jumped 17 5/16, or 17.8%, to an all-time high of 115 1/4 after last night reporting third-quarter earnings of 8 cents a share, 2 cents higher than expected. Today,

Hambrecht & Quist

lifted the stock to buy from market perform.

Rational Software

(RATL)

shed 3 15/16, or 9.9%, to 36 even after last night topping first-quarter earnings estimates by a penny, logging a profit of 16 cents a share.

SanDisk vaulted 14 9/16, or 26.8%, to an all-time high of 69 after last night beating second-quarter earnings forecasts of 15 cents by 4 cents a share. Today, Merrill Lynch raised the stock to long-term buy from accumulate.

In other earnings news:

Offerings and stock actions

Efficient Networks

(EFNT)

rocketed up 36 1/8, or 240.8%, to 51 1/8 after last night

Credit Suisse First Boston

priced its 4 million-share IPO top-range at $15. The company is a high-speed DSL equipment developer based in Dallas.

Analyst actions

C.R. Bard

(BCR)

grew 3 1/2, or 7.2%, to 52 1/8 after Morgan Stanley Dean Witter raised it to outperform from neutral with a 12-month price target of 64.

Forest Laboratories

(FRX)

tacked on 2 5/16 to 50 1/4 after Credit Suisse First Boston started coverage with a strong buy and a price target of 71.

Oshkosh Truck

(OTRKB)

added 1 1/4 to 53 after Credit Suisse First Boston started coverage with a buy and a price target of 65.

Miscellany

BP Amoco

(BPA)

expanded 3 to an all-time high of 121 1/2 after saying it plans to divest around $10 billion of assets over the next three years. The company also announce a "significant" crude oil discovery in deep water offshore Angola.

Con Ed

(ED) - Get Report

fizzled down 1/8 to 44 3/8 after New York City filed a $3 million suit against the utility, charging that the company should have prevented a blackout during a heat wave earlier this month. The 19-hour blackout started July 6 and left more than 200,000 New Yorkers in the dark.

National Semiconductor

(NSM)

advanced 1 to 28 5/16 after confirming a

Wall Street Journal

report saying the company developed a single PC chip that integrates most semiconductor content and functions. The company said the chip, called GeodeSC1400, provides online, digital video and browsing functions for the set-top box market.

Time Warner

(TWX)

chopped off 1 7/16 to 75 7/8 after the co-heads of the company's

Warner Bros.

and

Warner Music Group

, Robert Daly and Terry Semel, said they will leave at the end of the year when their contracts expire.

Ziff-Davis

(ZD)

stormed up 4 5/16, or 30.4%, to 18 1/2 after last night saying it hired

Morgan Stanley Dean Witter

to explore strategic alternatives. The company said its majority shareholder,

Softbank

, is refocusing its strategy on companies which operate totally on the Internet.