It had to happen eventually. Investors, recalling the commercials of

Eddie Antar, declared current stock prices insane and gave a lift to the major averages today, giving some respite to the market's mounting gloom over the economic picture. Capital goods, cyclicals and technology stocks led the way in a heavily traded session.

Investors bought into a market that was reeling after yesterday's

Federal Reserve meeting. The monetary policy committee maintained that the balance of risks in the economy continue to tilt toward higher inflation, and that disrupted a stock market hoping for friendlier words from the Fed.

Today's rebound in technology stocks indicates to some that money managers were overzealous in taking the

Nasdaq Composite Index to its lowest intraday levels since late May. The Nasdaq fell as low as 3382.53 today, having been under constant pressure during the last few weeks as investors faced numerous earnings warnings from companies ranging from

Intel

(INTC) - Get Report

to

Apple

(AAPL) - Get Report

and now

Dell

(DELL) - Get Report

.

However, with earnings reporting season

arriving, investors are heartened by the knowledge that the percentage of preannouncements that were

negative still falls short of the historical average; the large number of companies that have kept their mouths shut are expected to report strong numbers for the third quarter.

Through the early afternoon, though, this was another dispiriting session, with technology stocks led by significant losses in

Oracle

(ORCL) - Get Report

and

EMC

(EMC)

. Non-tech blue chips held in reasonably well, and around midafternoon the tech sector perked up, as investors responded positively to the breach of the 3400 level in the

Nasdaq Composite Index, identified as a technical support level. Levels defined as technical support are spots where buying is expected.

"I was really happy we held 3400," said Charles Payne, president and chief analyst at

Wall Street Strategies

. "A rotation based on fundamentals is one thing, but based on fear, it's another."

Oracle still finished down $1.50 to $68, but the stock was down $9 at one point, after losing $9.25 the previous day. The stock was the

Nasdaq Stock Market's

most active, with 100 million shares changing hands. Save for analyst actions, prompted in part by the stock's sharp Tuesday decline, there was little news on the stock. The company eventually issued a press release affirming its current strong outlook.

Microsoft

(MSFT) - Get Report

hit another 52-week low, losing $1.13 to $55.44.

EMC, a software storage company that's been one of the market's new darlings of late, finished down $2.75 to $91.25 after the company's chairman filed to sell approximately 8% to 10% of his holdings, not exactly a show of confidence. The stock was the

New York Stock Exchange's second-most actively traded today.

Meanwhile, other market darlings, such as fiber optics and telecommunications equipment companies, rebounded sharply today.

JDS Uniphase

(JDSU)

gained $6.44 to $94.06 today, while

SDL

(SDLI)

rose $20 to $310.94.

Semiconductor stocks, hit hard in recent weeks, were up sharply today; the

Philadelphia Stock Exchange Semiconductor Index

gained 6.2% today. The

Philadelphia Stock Exchange Computer Box Maker Index

rose 3.5% today.

Odds on a strong day tomorrow at first blush are looking long. PC maker Dell, one of the big-cap tech bellwethers, issued an earnings warning, saying weak European demand could shave a couple of cents off fourth-quarter profits. Right now, today's Nasdaq action looks like a rebound off support levels, rather than a shift in sentiment in terms of market valuation. The economic picture is still fuzzy -- strategists by and large expect a slowing in economic growth, and while investors feel the selling had gone too far, it's not clear whether the market can build on today's strength.

"I firmly believe the market has more downside risk," said Roseanne Lang, head of block trading at

Cantor Fitzgerald

. "It's a function of again being concerned with fundamentals and looking at valuations."

Cyclical stocks continued their strong gains. Dow component

International Paper

(IP) - Get Report

finished strong, gaining $1.88 to $31.50, and leading the

Philadelphia Forest & Paper Products Index

to a 2.8% gain. The

S&P Chemical Index

rose 1.6%.

Consumer cyclicals and capital goods names also rose strongly.

Ford

(F) - Get Report

gained 3% and

Illinois Tool Works

(ITW) - Get Report

rose 2.8%.

In the wake of today's strength in technology and capital goods companies, recent leaders like pharmaceuticals, financials and energy stocks were mostly weak today. The

Philadelphia Stock Exchange/KBW Bank Index

shed 1.9% today, and the

Amex Pharmaceutical Index

lost 1.2%.

Market Internals

Breadth was mixed on strong volume.

New York Stock Exchange: 1,254 advancers, 1,565 decliners, 1.2 million shares. 53 new 52-week highs, 77 new lows.

Nasdaq Stock Market: 1,874 advancers, 2,140 decliners, 2 billion shares. 35 new highs, 281 new lows.

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Most Active Stocks

NYSE Most Actives

  • Lucent Technologies (LU) : 23 million shares.
  • EMC: 21.6 million shares.
  • Xerox (XRX) - Get Report: 19 million shares.

Nasdaq Most Actives

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Sector Watch

The

Dow Jones Transportation Average

advanced 2.5%, lifted by airline stocks for a second day in a row, which in turn boosted the

American Stock Exchange Airline Index

2.4%.

Delta

(DAL) - Get Report

was adding about 12 points to the transport index's average.

The

Morgan Stanley Cyclical Index

rose 1.7%, while the

Philadelphia Stock Exchange Forest & Paper Products Index

jumped 2.8%. Shared components

Georgia-Pacific

(GP)

and

International Paper

(IP) - Get Report

were both up.

Pick an energy sector, any energy sector -- they were all down, including the

American Stock Exchange Natural Gas Index

, off 2.2%, the

Chicago Board Options Exchange Oil Index

, down 2%, and the

Philadelphia Stock Exchange Oil Service Index

, 4.2% lower.

Telecommunications companies recovered from recent weakness.

Lucent Technologies

(LU)

gained 7.7% in today's session, and chipmaker and cell phone company

Motorola

(MOT)

rose 8.5% today.

SBC Communications

(SBC)

gained 3.6%, and the

Nasdaq Telecommunications Index

gained 2.4%.

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Bonds/Economy

Treasuries ended lower on little news, as the focus shifted from yesterday's

Federal Open Market Committee meeting to Friday's September

employment report. In keeping with the

Fed's aggressive stance on interest rates, short-maturity issues are faring worse than long-maturity ones. There are no major economic reports today.

In deciding to keep the

fed funds rate at 6.5%, the Fed maintained their stance that the economy is still at risk of rising inflation,

citing the high rate of labor-force utilization -- a.k.a., the low

augmented unemployment rate -- as one of the major reasons. The September jobs report will measure that rate anew. In August it stood at 6.9%, just off its all-time low (since the Labor Department began measuring it in 1994) of 6.8% in June.

The benchmark 10-year

Treasury note lately was down 8/32 at 98 29/32, lifting its yield to 5.895%.

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International

Investors dumped

European stocks in a hurry today after yesterday's three-digit pullback on the Nasdaq intensified earnings worries there.

In London, the

FTSE 100

lost 10.10 to 6334.90.

Across the channel, the

CAC 40

in Paris fell 104.30 to 6296.13, while the

Xetra Dax

in Frankfurt dropped 38.83 to 6823.43.

The euro continued its downward spiral, lately down to 0.8744.

TheStreet.com

recently looked at what

ails the euro .

Undaunted by Wall Street's uninspiring performance the day before, most of

Asia's major markets posted solid gains Wednesday.

Japan's

Nikkei 225

closed up 237.0, or 1.5%, to 16,149.1, shaking off early losses with help from both Old and New Economy shares.

In Tokyo currency trading, the dollar fell to 108.74 yen from 108.88 yen. The greenback was lately trading up to 109.35 yen.

Other Asian markets also had a good session Wednesday, as Hong Kong's

Hang Seng

index rose 152.9, or 1%, to 15,878.9, and South Korea's

Kospi

index overcame an early drop to close up 9.2 points, or 1.6%, to 598.4.

Taiwan's equity market was the region's one exception, however; the

TWSE

index plunged 145.5, or 2.4% to 5997.9, as the country's premier unexpectedly resigned.

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