SAN FRANCISCO -- In the wake of yesterday's big market losses and George W. Bush's big victory in the primaries, conservatism was in vogue today as traders voted for blue-chips. But there was compassion for the Nasdaq Composite Index, too, as the tech proxy recovered from some steep midmorning losses to close modestly higher.

The action was embodied by drug stocks, which rose from a pronounced slump as investors went searching for value. Leading the way were

Bristol-Myers Squibb

(BMY) - Get Report

, up 10.1%, and

Schering-Plough

(SGP)

, higher by 10.9%;

PaineWebber

upped recommendations on each. The

American Stock Exchange Pharmaceutical Index

rose 5.9%.

Meanwhile, investors were encouraged as crude prices declined 8.9% to $31.10 a barrel after

OPEC

hinted higher production is forthcoming.

"Oil coming down psychologically helps because it could make the

Fed

less aggressive," said Robert Harrington, co-head of block trading at PaineWebber. "Some people are looking at some old-economy stocks that got oversold short-term. We're seeing a decent bounce-back rally, but will have to see if it follows through."

Follow-through was a problem for blue-chips even today. After rising as high as 9918.89 behind strength in drugmakers

Merck

(MRK) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

, the

Dow Jones Industrial Average

closed up 60.50, or 0.6%, to 9856.53.

Harrington predicted the index will continue to be volatile as it "tries to find a base around this level from which maybe it can work higher later in the year."

The Dow was restrained by weakness in

American Express

(AXP) - Get Report

and

Hewlett-Packard

(HWP)

. Also,

Procter & Gamble

(PG) - Get Report

fell a further 5.1% after

yesterday's debacle.

IBM

(IBM) - Get Report

was a positive influence on the Dow, rising 2.8% on news of its

alliance with

Ariba

(ARBA)

and

i2

(ITWO)

.

Ariba rose 2% and i2 gained 12.4%, holding the high-tech fort against marauding sellers until the rest of the tech cavalry appeared after lunchtime.

From its intraday low of 4722.14 at around 11 a.m. EST, the Nasdaq rose steadily and inexorably until about 3:30 p.m. before closing up 49.55, or 1%, to 4897.39.

Gotta Have Faith

Even at the Nasdaq's nadir, few market players believed the action suggested blue-chips would revive at the expense of tech names for long.

Charles Payne, chief analyst at

Wall Street Strategies

, recalled that the

last time the Dow dipped below 10,000, the Nasdaq took a bit of a powder before storming back in earnest.

"You saw some bargain-hunters coming out with drugs the biggest beneficiaries. But I don't think the game has changed," Payne said. "In a couple of days more of the buying and cash flow will be redirected back into the Nasdaq."

That desire reasserted itself today. Gains by bellwethers such as

Microsoft

(MSFT) - Get Report

and

MCI WorldCom

(WCOM)

helped the Comp overcome weakness in tech stalwarts such as

JDS Uniphase

(JDSU)

and

Ciena

(CIEN) - Get Report

. The

Nasdaq 100

rose 1.3%.

TST Recommends

Yesterday's dichotomy between P&G and

Network Solutions

(NSOL)

is the "snapshot that told the story" of why investors just can't stay away from the Comp, Payne said. "The reality is, I can find value all day long

on the Big Board but people want instant gratification. They want to make money."

PaineWebber's Harrington agreed, noting the 10.9% rise for

Oracle

(ORCL) - Get Report

, which announced a business-to-business marketing alliance with

Chevron

(CHV)

.

"That kind of momentum is still going to continue," the trader said. "That's where the action is going to be."

Chip and chip-equipment makers such as

E-Tek Dynamics

(ETEK)

and

KLA-Tencor

(KLAC) - Get Report

took a break from their recent momentum, however. The

Philadelphia Stock Exchange Semiconductor Index

fell 1.7%.

Internet favorites such as

Yahoo!

(YHOO)

fared better, helping

TheStreet.com Internet Sector

index rise 38.71, or 3.1%, to 1288.01.

In IPO action,

Crayfish

(CRFH)

, the Japanese email service, rose 414% on its first day of trading.

The

S&P 500

rose 11.10, or 0.8%, to 1366.72, aided by recently punk groups such as drug makers, transports and retailers but restrained by large-cap tech names and financials.

The

Russell 2000

, meanwhile, declined 0.79, or 0.1%, to 594.68 amid negative market internals and as biotech stocks paused from their recent upturn. The

American Stock Exchange Biotech Index

fell 5.5% thanks to losses by names such as

ImClone

(IMCL)

, which fell 9.9%.

Additionally, oil service stocks got hit by the declining crude prices.

Donaldson Lufkin & Jenrette

cut its recommendations on the group, sending

Halliburton

(HAL) - Get Report

,

Santa Fe International

(SDC) - Get Report

and

Transocean Offshore

(RIG) - Get Report

down more than 10% apiece. The

Philadelphia Stock Exchange Oil Service Index

shed 8.9%.

In

New York Stock Exchange

trading, 1.199 billion shares were exchanged while declining stocks led advancers 1,535 to 1,429. In

Nasdaq Stock Market

action 1.983 billion shares traded while losers led 2,365 to 1,895. New 52-week lows bested new highs 250 to 50 on the Big Board while new highs led new lows 198 to 164 in over-the-counter trading.

Among other indices, the

Dow Jones Transportation Average

rose 88.94, or 3.9%, to 2352.53; the

Dow Jones Utility Average

shed 3.52, or 1.3%, to 276.47; and the

American Stock Exchange Composite Index

lost 15.54, or 1.5%, to 1001.40.

The price of the 10-year Treasury note fell 1/32 to 100 28/32, yielding 6.38%.

For coverage of today's top stocks in the news, see the Company Report, published separately

.