(

Updated from 4:04 p.m. EDT

)

Good or bad, this session felt like one of those cool February days. Investors, feeling cocky, puffed their chests out and let it all ride on technology, boosting the

Nasdaq Composite Index to its best close since April 10. And, wouldn't you know it -- volume was strong, but breadth was mediocre. Let it snow, let it snow, let it snow.

The Nasdaq Composite, buoyed by strong earnings figures and renewed enthusiasm, rose 75.23, or 1.84%, to 4174.82. The

Dow Jones Industrial Average rose 5.3 to 10,788.71, while the

S&P 500 rose 2.92 to 1495.84. The

Russell 2000 gained 1.95 to 542.20.

It was another day of strength for chip stocks, led by

Motorola

(MOT)

, which

reported earnings of 23 cents a share last night, in line with estimates. It closed up 7.9%, on 57.3 million shares, the

New York Stock Exchange's most active. The

Philadelphia Stock Exchange Semiconductor Index

gained 2.6%.

After a month of wary advances, where most gains were built on the back of big-cap, safe technology stocks and defensive arenas such as drugs and insurance stocks, investors' appetites have been whetted by the beef tenderloin -- technology, especially semiconductors.

It's the continuation of a rally that began this week after the soft June

employment report

, the report that first got stock investors thinking that the

Federal Reserve might not raise interest rates again this year.

The action of the last few days bolsters that sentiment, said Hugh Johnson, chief investment officer at

First Albany

, who does not believe the Fed will raise rates in August.

Another prominent leader -- financials -- were mixed today, but that had to be expected after yesterday's staggering

UBS

(UBS) - Get Report

offer to buy

PaineWebber

(PWJ)

. PaineWebber finished up 2.5%, and the

American Stock Exchange Broker/Dealer Index

gained 0.7%. That's largely due to strength in

J.P. Morgan

(JPM) - Get Report

(up 1.7%), which reported earnings of $2.90 a share vs.

First Call/Thomson Financial

estimates of $2.45.

"The financials have acted like real heroes, and it's an indication of people's confidence in the overall market," said Randy Billhardt, head of block trading at PaineWebber. "Between techs and financials you've got great leadership."

But today, it was really about tech, and tech stalwarts. Investors put their coin into names like

Intel

(INTC) - Get Report

,

Cisco

(CSCO) - Get Report

and

Hewlett-Packard

(HWP)

, riding them to impressive gains, especially H-P. The computer boxmaker rose 5%, reportedly due to positive comments from the company's CEO, Carly Fiorina, at Herb Allen's West Coast conference.

"It's a very clear indication that there's more confidence in stocks now than there was a week ago," said Albany's Johnson. "Really, the big plus is, we're not rising or taking on gains in big chunks that might be called speculative."

Or are we?

Ariba

(ARBA)

bounded 27% today, after the company's strong earnings report and several analyst upgrades.

Now that the landscape seems safer, volume and wild swings seem to have returned. A jump like Ariba's illustrates the confident resurgence of that go-go style of trading that had gone underground for a brief time when the Nasdaq swooned.

"We're still seeing a lot of disparities between individual names," said Rob Cummisford, portfolio manager of the

Kent Small Company Growth Fund

. "There've definitely been some investors return to the markets as things have seemingly stabilized overall, but there's still tremendous volatility on a daily basis."

Other examples of this volatility were today's gains in names such as

BroadVision

(BVSN) - Get Report

, finishing up 4.7%, and former 1000-price-target darling

Commerce One

(CMRC)

, which bounced 15.5% as a result of a strong report from its B2B pal, Ariba.

TheStreet.com Internet Sector

index gained 1.3% today, in part due to BroadVision.

On the downside, old momentum favorites like

Human Genome Sciences

(HGSI)

dropped 8.7% and

Protein Design Labs

(PDLI) - Get Report

lost 8.1%. These names frequently see few large block trades, and the heavy number of sellers and buyers increases volatility in these stocks.

The Best Defense -- A Good Offense

The momentum in big-cap technology today took the shine out of other sectors that had performed well of late -- such as health care, drugs and tobacco. Drug stocks particularly struggled today.

Bristol-Myers Squibb

(BMY) - Get Report

ended down 5.5% and

Schering-Plough

(SGP)

fell 9.2%, despite meeting Wall Street's estimates for 43-cent earnings in the second quarter.

Investors and traders remain wary of the Fed and what its intentions may be. Many economists would say that the Fed's efforts to slow the economy may not be finished yet, and that a rate hike on Aug. 22 remains a good possibility. But the action in the last week indicates the market's quite upbeat about that, and about the earnings period.

What could derail that is nasty inflation data. Two consecutive soft employment reports suggest the labor market may be loosening slightly, and it's up to consumer and wholesale inflation indicators to affirm the market's renewed view that the slowing will be soft, rather than hard.

Prior to tomorrow's open, June's

Producer Price Index

,

retail sales

and

industrial production

figures all will be released.

The core PPI, which excludes food and energy prices, is expected to rise 0.1% tomorrow.

Bang! Zoom! To the Moon, Alice!

On Day 3 of earnings season,

General Electric

(GE) - Get Report

said its second-quarter earnings rose 20% and beat estimates by a penny. Despite the good news, the stock closed lower by about 2.3%.

Applied Micro

(AMCC)

soared on the Nasdaq, ending up about 22% after it reported better than expected earnings last night and received positive comments from PaineWebber and

Goldman Sachs

.

Market Internals

Breadth was mildly positive on above-average volume.

New York Stock Exchange: 1,459 advancers, 1,415 decliners, 1.02 billion shares. 81 new 52-week highs, 24 new lows.

Nasdaq Stock Market: 2,124 advancers, 1.910 decliners, 1.84 billion shares. 125 new highs, 63 new lows.

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Most Active Stocks

NYSE Most Actives

  • Motorola: 57.3 million shares.
  • AT&T (T) - Get Report: 28.9 million shares.
  • Compaq (CPQ) : 20.6 million shares.

Nasdaq Most Actives

  • Cisco: 57 million shares.
  • WorldCom (WCOM) : 45 million shares.
  • Microsoft (MSFT) - Get Report: 39.6 million shares.

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Sector Watch

After strengthening through June, biotechnology stocks continued a recent spate of weakness, dropping today.

Amgen

(AMGN) - Get Report

fell off 5.3% and the

Nasdaq Biotechnology Index

ended down 5.7%.

Chemical stocks rose today, led by a 2.4% rise in

Dow Chemical

(DOW) - Get Report

and a 3.3% jump in

DuPont

(DD) - Get Report

, helping the

S&P Chemical Index

to a 1.2% gain.

Paper stocks are continuing recent strength, led by a 2.2% bounce in

Georgia-Pacific

(GP)

. The

Philadelphia Stock Exchange Forest & Paper Products Index

tacked on 2%.

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Bonds/Economy

Treasuries ended higher thanks to a late-morning

coupon pass by the

Fed and a bit of friendly economic news.

The coupon pass targeted bonds maturing in 2002 and from 2016 to 2028.

In economic news,

initial jobless claims

(

definition |

chart |

source

) hit 319,000, the highest since June 1999, from 292,000 the previous week.

The benchmark 10-year Treasury note was up 18/32 to 103 18/32, its yield at 6.004%.

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International

The European bourses finished the session mixed.

London's

FTSE

was under pressure from losses on larger London-listed stocks, including telecom giant

Vodafone AirTouch

(VOD) - Get Report

, banking group

HSBC

(HBC)

and oil giants

BP Amoco

(BPA)

and

Royal Dutch

(RD)

. The FTSE lost 42.8, or 0.7%, 6475.7.

Germany and France ended higher, with Frankfurt's

Xetra Dax

rising 130.02, or 1.8%, to 7195.99 and the Paris

CAC

up 33.85, or 0.5%, to 6570.36.

The euro was lately trading at $0.9370.

Tokyo and Hong Kong shrugged off Wall Street's Wednesday performance and closed lower on weakness in some of their own stocks, though Korea and Taiwan posted modest gains for the day.

Japanese shares sagged in the wake of a large bankruptcy, and a milk scandal.

Sogo

, one of Japan's largest department store operators, filed for bankruptcy under court protection yesterday, while

Morinaga Milk Industry

slipped 11.9% on news that as many as 20 children fell ill after drinking the firm's milk. The

Nikkei 225

index shed 305.23, or 1.8%, to 17,036.90.

Rumors that

Standard & Poor's

may be ready to cut Japan's sovereign debt rating continue to fly, meanwhile, and the greenback edged slightly higher to 108.71 yen in Tokyo trading, but the dollar had come off those levels, recently at 108.18 yen.

And property shares pressured Hong Kong's

Hang Seng

index, which dipped 102.76 to 17,449.50.

Elsewhere in Asia, Korea's

Kospi

index rose 5.99 to 845.75, while Taiwan's

TWSE

index jumped 207.91, or 2.6%, to 8267.66.

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As originally published, this story contained an error. Please see

Corrections and Clarifications.