By John J. Edwards III
Staff Reporter

The blue-chips are screaming as Wall Street starts popping corks in anticipation of a Fed-less summer.

The run for the

Dow Jones Industrial Average

looks like it is all about the curmudgeonly

Fed

and the perceived dead certainty that it will keep interest rates steady at its July policy meeting. The tireless blue-chip measure vaporized two century marks, shooting up 135.64, or 1.8%, to a record 7711.47. It's up a stunning 20.6% from its April 11 trough at 6391.69, and up 19.6% on the year. The broader

S&P 500

also set a new high, up 13.89, or 1.6%, to 883.46.

Market players embraced the idea that this morning's surprisingly soft May retail sales report meant the Fed would stand pat. The bond market soared, with the yield on the bellwether 30-year Treasury bond whistling down to 6.76%.

Robust inflows into stock mutual funds also contributed to the massive rally. The

Investment Company Institute

estimated that stock funds attracted $18.5 billion in May, up from $15.7 billion in April.

Technology stocks, however, took another pounding, primarily in the hardware sector. The group suffered from concerns about PC sales and worries about the pace of semiconductor-related sales. The

Nasdaq Composite Index

, weighed down by

Intel's

(INTC) - Get Report

loss of 3 13/16 to 143 21/32, could muster only a slight move above break-even. It finished at 1411.32, up 3.47 but short of its Monday record of 1412.17. The small-cap

Russell 2000

rose 1.92 to a record 389.54.

Unsurprisingly, market internals were firmly positive.

New York Stock Exchange

advancers swamped decliners by 1,868 to 729 on volume of 598 million shares, the third-highest volume of 1997. The Big Board featured 435 new highs and just 13 new lows. On the Nasdaq, 2,243 advancers beat 2,040 decliners on 639.5 million shares.

Back on

April 29, when the Dow closed at 6962.03,

Merrill Lynch

strategist Lisa Cohen said stocks still looked extended. And now? "I'll give you three guesses, and the first two don't count," she said. "It's looking toppy. But with bond prices coming down, there's support there."

Cohen added a note of warning to market mavens thrilled with the signs of a more sluggish economy: "A slowing economy and slowing sales are not good for stocks in the long run, so we'll see what happens."

More cautionary words came from Robert Brusca, chief economist at

Nikko Securities

, who said the decline in May retail sales impressed him not a bit. "I think that the Fed's going to be raising rates, and they may be raising rates in July," he said. "This is not the last retail sales report the Fed will see before the meeting. It's a good time not to put all your eggs in one basket."

Stanley Nabi, chief economist and chairman of the investment policy and planning committee at the

Wood Struthers & Winthrop

unit of

Donaldson Lufkin & Jenrette

, said the market's recent performance has left him numb. "What's happening here is complete capitulation by the bears," he said. "I have no intention of being part of the stampede."

Nabi said he has been "selling on the margins, so if the market comes down I'll have some currency to buy with." And he does see the market coming down: "I think sometime between now and the end of the summer, we're going to get clocked."

Thursday's market action

:

As noted, techs mainly tumbled today.

Cyrix

(CYRX) - Get Report

lost 1 1/8 to 20 7/8 on a downgrade to market outperform from the recommended list at

Goldman Sachs

.

Cowen

downgraded Intel and

Advanced Micro Devices

(AMD) - Get Report

to neutral from buy, sending AMD down 1 3/8 to 38. Also suffering was

Applied Materials

(AMAT) - Get Report

, which fell 1 7/8 to 60 1/8. The

Philadelphia Stock Exchange Semiconductor Index

gave up 4.13 to 287.96.

Some other tech issues ended higher as investors hunted for bargains.

Gateway 2000

(GTE:NYSE) rose 3/4 to 63 1/2,

Dell

(DELL) - Get Report

rose 2 3/8 to 112 3/16 and

Hewlett-Packard

(HWP)

rose 3/8 to 52 1/2.

Away from the hardware sector, networkers were mixed, with

Ascend

(ASND) - Get Report

up 15/16 to 42 1/2,

Cisco

(CSCO) - Get Report

up 1/16 to 63 25/32,

Bay Networks

down 3/8 to 23 and

3Com

(COMS)

down 5/8 to 46 31/32. The group remains a focal point for investors seeking guidance on how to read the technology group as the traditionally slow summer season approaches.

Elsewhere,

IBM

(IBM) - Get Report

managed to recover for a gain of 1 to 88 1/8. The company's CFO, Richard Thoman, resigned to join

Xerox

(XRX) - Get Report

as president and chief operating officer. Xerox gained 2 to an all-time high of 71 3/4.

Polo anyone? Polo

everyone

?

Polo Ralph Lauren

(RL:NYSE) debuted on the NYSE at 26 and zipped up 5 1/2 to 31 1/2 on volume of nearly 20 million shares. Among other high-fashion stocks,

Gucci

(GUC)

added 5/8 to 73 1/2,

Mossimo

(MGX)

weakened 1/4 to 8 3/8 and

Donna Karan International

(DK) - Get Report

was unchanged at 12 1/8.

Tobacco stocks puffed higher despite a congressman's release of damning documents from

Brooke Group's

Liggett

unit and the filing of a new antitobacco suit by the state of California.

Philip Morris

(MO) - Get Report

rose 1 7/8 to 44 1/2,

Lorillard

parent

Loews

(LTR)

rose 2 1/2 to 101 and

RJR Nabisco

(RN)

rose 1 3/8 to 34. Brooke Group was unchanged at 4 3/4.

Banks, bolstered by the bond market's plummeting interest rates, jumped higher.

Chase

(CMB)

rose 1 3/8 to 100 3/4,

NationsBank

(NB)

rose 3/4 to 66 1/2 and

Wells Fargo

(WFC) - Get Report

rose 5 3/4 to 276 1/8.

Visx

(VISX)

collapsed 5 7/8 to 22 1/4 after warning that its second-quarter and 1997 earnings would fall short of expectations. The

First Call

consensus estimates are 22 cents per share for the quarter and 98 cents for the year.

Harnischfeger

(HPH)

gained 2 1/4 to 43 after saying it may drop its $19-per-share hostile bid for

Giddings & Lewis

(GIDL)

because of a competing bid from

Thyssen AG

. Giddings bounced 1 13/16 to 20 47/64.

CKE Restaurants

(CKR)

moved up 1/8 to 26 3/4 after reporting first-quarter earnings of 31 cents per share, well ahead of the First Call view of 26 cents and the year-ago 19 cents.

UBS Securities

upgraded

Champion International

(CHA) - Get Report

to strong buy from hold, sending it up 3 1/2 to a 52-week high of 52 5/8. Champion and other paper companies said

yesterday that they plan to raise prices. Fellow paper makers gaining ground today included

Georgia-Pacific

(GP)

, up 1 1/2 to a 52-week high of 89 5/8, and

International Paper

(IP) - Get Report

, up 1 to an all-time high of 51 3/8. Analysts believe steady economic growth will help paper concerns maintain decent pricing.

Bringing an end to a long-troubled relationship,

U S West Media Group

(UMG)

sold its 4.4 million-share stake in

Time Warner

(TWX)

to

Salomon Brothers

for $220 million. Time Warner dipped 3/8 to 49 5/8 and U S West Media advanced 3/8 to 22 1/4.

Grab your drawers!

Credit Suisse First Boston

removed

Fruit of the Loom

(FTL)

from its recommended list. FTL dropped 3/4 to 33 1/8.

Iomega

(IOM)

continued to leap higher, gaining 1 to 21 amid heavy Internet chat-board chatter about its post-close conference call.

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