(

Updated from 4:04 p.m. EDT

)

The

Dow Jones Industrial Average

buoyed back 49.9, or 0.4%, to 10,447.9 to join the

Nasdaq Composite

in positive territory. The blue-chip index managed to overcome losses from

IBM

(IBM) - Get Report

and its financial components. Telecom, networking and chip stocks surged in final hour of trading for the second-quarter, leaving the

Nasdaq Composite Index up 88.9, or 2.2%, to 3966.1.

The

S&P 500 finished the day up 12.21, or 0.8%, to 1454.60.

The Dow's interest-rate-sensitive financial components were prevented the index from gaining further ground at the end of the session.

J.P. Morgan

(JPM) - Get Report

,

Citigroup

(C) - Get Report

and

American Express

(AXP) - Get Report

all closed lower, on nervousness that

Alan Greenspan's rate raising campaign may resume at the next

Federal Open Market Committee meeting, Aug. 22.

"It's nervousness that we might see further rate increases in August," said Patrick Boyle, director of trading at

Credit Suisse First Boston

. "I think it's more preannouncement worries -- more so than the

Fed right now, though."

Boyle said the group could be poised for a rebound if the sector isn't hit with any earnings warnings next week.

The

American Stock Exchange Broker/Dealer Index

finished off 11.36, or 2.2%, to 495.26.

A Late Charge

But, in the final moments of trading, buyers came back in to pick up some names that would make their portfolios' second-quarter losses look a little less painful. Several shares, including

Procter & Gamble

(PG) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

, that were down for most of the session, staged late-day comebacks to finish in the green.

The

American Stock Exchange Pharmaceutical Index

, which was boosted 18% during the second quarter in the wake of tech's decline, topped off the day up 6.4, or 1.5%, to 421.1.

And it was just window-dressing that made for a bumpy ride on Wall Street. The rebalancing of the

Russell 2000 had big investors working to realign their portfolios in time for the change.

The rebalancing "may have an effect well into next week," said Bill Schneider, head of U.S. equity block trading at

UBS Warburg

. "I don't think people can buy or sell what they need in such a confined period of time, and it's going to lead to higher volume than you'd otherwise expect."

A total of 450 companies are leaving the Russell, while 683 companies are entering the index. The RUT closed out the session up 4.65, or 0.9%, to 517.23.

Broadcom

(BRCM)

, which was added to the S&P 500 popped 14 3/16, or 6.9%, to 218 15/16.

TheStreet.com Internet Sector

index also had a positive finish, ending up 8.68, or 1%, to 841.84.

The airlines drifted lower in the final hour, after spending most of the session in flight. An industry report from

Donaldson Lufkin & Jenrette

gave some stocks in the group a lift, but the

American Stock Exchange Airline Index

ended down 0.5, or 0.3%, to 158.61, with

AMR

(AMR)

and

Delta

(DAL) - Get Report

both lower.

The

Dow Jones Transportation Average

closed off 2.3%, behind drops in

CNF

(CNF) - Get Report

and

Union Pacific

(UNP) - Get Report

.

Tech Benefits From Rotation ... or Something

Tech won big today thanks in part to positive analyst comments. Most notably,

Goldman Sachs

added

Nokia

(NOK) - Get Report

and

Ericsson

(ERICY)

to its recommended list. Nokia finished up 3.8%, and Ericsson rose 7%.

"It's more like schizophrenia than rotation," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

. "It's encouraging to see the semiconductors acting a little better; there are several houses hawking their favorites, because there's not much chance of big move without the semiconductors."

This morning, analysts were falling all over themselves to support

Compaq

(CPQ)

after

Salomon Smith Barney

downgraded the stock late yesterday, adding momentum to yesterday's selloff. Investors didn't respond -- Compaq slid 1/8 to 25 9/16 on 26 million shares, making it the most actively traded name on the

New York Stock Exchange.

Meanwhile, analysts continued to cut estimates for

Unisys

(UIS) - Get Report

today, which issued an earnings warning yesterday, leading the stock to hit an intra-day 52-week low. The stock closed out the day down 3/16 to 14 9/16.

For the week, the Dow lifted 0.4%, the Nasdaq Composite gained 3.1%, the S&P 500 bounced 0.9% and the Russell 2000 rose 1.3%. The Dow Jones transports fell 1.4%, the

Dow Jones Utility Average

edged down 5.3% and the

American Stock Exchange Composite Index

slid 0.3%. TheStreet.com Internet Sector index inched up 0.5% in the latest week.

Market Internals

Breadth was positive on heavy volume in the last hour of trading.

New York Stock Exchange: 1,507 advancers, 1,507 decliners, 1.408 billion shares. 95 new 52-week highs, 98 new lows.

Nasdaq Stock Market: 2,224 advancers, 1,814 decliners, 1.89 billion shares. 105 new highs, 118 new lows.

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Most Active Stocks

NYSE Most Actives

Nasdaq Most Actives

  • Broadcom: 31.3 million shares.
  • Cisco (CSCO) - Get Report: 29.7 million shares.
  • WorldCom (WCOM) : 24.4 million shares.

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Sector Watch

Among the sectors faring the best for much of the session were utilities and tobacco. And then, something went wrong. The

Dow Jones Utility Average

ended down 2.4%, and the

American Stock Exchange Tobacco Index

was off 2.2%.

After seeing some strength yesterday, the

American Stock Exchange Natural Gas Index

shaved some of its gains, to close down 2.3%. The

S&P Insurance Index

was also down and out, losing 3.4%.

Some telecommunications companies were stronger, including

WorldCom

(WCOM)

, ending up 4%,

Level 3 Communications

(LVLT)

, up 1.3%, but the sector remained mixed overall. Telecom stocks took a hit yesterday in the U.S., Asia and Europe after Ericsson's chief executive made some bearish comments about future growth.

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Bonds/Economy

Treasuries ended narrowly mixed after a mixed bag of economic data and trading that was dominated by month- and quarter-end considerations.

The action was also a function of the recent trading range: Issues that yesterday reached the high (in price terms, low in yield terms) end of their recent trading range retreated, but issues that were still below their recent highs yesterday kept moving up.

The benchmark 10-year Treasury note ended up 1/32 at 103 12/32, trimming its yield a fraction of a basis point to 6.029%. The five-year note also gained slightly. But the two-year note and the 30-year bond both retreated, with the 30-year losing 8/32 to 104 29/32, lifting its yield 2.1 basis points to 5.897%.

At the

Chicago Board of Trade

, the September

Treasury futures contract fell 5/32 to 97 9/32.

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International

The large European bourses climbed climbing higher on gains in telecom at the end of their session.

London's

FTSE

was up 73.7 to 6312.7, or 1.18%.

Across the channel, Frankfurt's

Xetra Dax

was up 29.22, or 0.43%, to 6903.76, while the Paris

CAC

was up 45.72, or 0.71%, to 6446.54.

Asian markets, meanwhile, closed lower on the notorious comments from Ericsson's CEO yesterday.

In Tokyo, the benchmark

Nikkei 225

index shed 64.85 points to 17,411.05, while Hong Kong's

Hang Seng

index fell 131.02 points to 16,155.78.

In Tokyo currency trading, the dollar edged slightly higher against the yen to fetch 105.59, a move dealers attributed to a ratings action by

Fitch

, and continued to rise during New York trading, lately at 106.22. In reducing the rating, Fitch cited concerns over economic recovery in the household sector, as well as Japan's expanding public sector debt.

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