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SAN FRANCISCO -- Once they stopped doing impersonations of Linda Blair, investors returned to doing what has come most naturally in recent years: buying technology stocks while shunning blue-chips.

But a modest repeat of the head-spinning volatility evident

yesterday re-emerged in the final hour, dramatically trimming the

Nasdaq Composite Index's

gains while sending blue-chip averages deeper into negative territory.

The late-session selling encouraged some market observers to contend the recent volatility has resulted in a change in psychology; specifically, that investors will now be anxious to sell rallies rather than buy dips.

But Sam Ginzburg, senior managing director of equity trading at

Gruntal

, disputed that notion, calling today part of the "calming process" necessary after the recent gyrations.

"We'll have a couple of volatile days as people start getting used to what happened, but I think the plunge is over," Ginzburg said. "People will come back and start buying 'em again. Then buying begets buying. It may not go up as quickly as it came down but the frenzy will start again."

It may not have been frenzied, but some aggressive buying in the tech and biotech sectors emerged today once some initial volatility evaporated.

After trading as low as 4009.09 early on, the Comp rose steadily thereafter, reaching as high as 4286.88 with about an hour left in trading.

The enthusiasm was engendered by some positive fundamental news in the tech and biotech areas, plus hopes yesterday's midday levels will prove to be the index's nadir. But the Nasdaq faded into the close, trading briefly in negative territory before closing up 20.45, or 0.5%, to 4169.34.

The afternoon selling exacerbated early weakness in bellwethers such as

Intel

(INTC) - Get Intel Corporation Report

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and

Microsoft

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, while

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

and

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

surrendered midday gains. The

Nasdaq 100

finished down 3.5% to 4030.69 after trading as high as 4156.43.

Much as they led yesterday's bounce, chip stocks were at the forefront of today's midday tech rally.

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

rose 12.1% after forecasting its first-quarter sales would top $1 billion;

Merrill Lynch

upped its recommendation on AMD.

Additionally,

Micron Technology

(MU) - Get Micron Technology, Inc. Report

rose 12.4% after

Robertson Stephens

upped its rating.

The enthusiasm spread to other chip and equipment makers such as

Motorola

(MOT)

,

Applied Materials

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,

Lam Research

(LRCX) - Get Lam Research Corporation Report

and

Rambus

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. Each fell from their session highs but still registered solid gains to help the

Philadelphia Stock Exchange Semiconductor Index

rise 6.2%.

The Comp also got a boost from biotech names such as

Amgen

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and

Abgenix

(ABGX)

, which rose sharply after

President Clinton

sought to clarify comments which have roiled the group since last month.

The

American Stock Exchange Biotech Index

rose 5.6%, and the sector helped the

Russell 2000

climb as high as 526.13, before finishing up 11.92, or 2.4%, to 518.04.

Elsewhere in tech,

i2 Technologies

(ITWO)

added 12% after

Donaldson Lufkin & Jenrette

upped its recommendation.

Internet stocks struggled to sustain a rebounded from their recent shellacking;

TheStreet.com Internet Sector

index closed up 1.18, or 0.1%, to 971.98 after trading as high as 1012.96.

Meanwhile, the

Dow Jones Industrial Average

fell 130.92, or 1.2%, to 11,033.92 after trading as high as 11,218.21 and as low as 11,002.58.

In addition to Microsoft and Intel, the Dow was sabotaged by weakness in components such as

Coca-Cola

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,

ExxonMobil

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, and

American Express

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.

Hewlett-Packard

(HWP)

and

IBM

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were the Dow's best performers.

Once as high as 1506.55, the

S&P 500

closed off 7.36, or 0.5%, to 1487.37.

Energy stocks in general tumbled, although crude prices stemmed their recent decline. The

American Stock Exchange Oil & Gas Index

fell 2.2% while the

Philadelphia Stock Exchange Oil Service Index

lost 4.7%.

Meanwhile, airline stocks rallied behind strength in

American Airlines

parent

AMR

(AMR)

, which rose 5.8% after

Salomon Smith Barney

upped its recommendation. The

Amex Airline Index

rose 3.8% while the

Dow Jones Transportation Average

rose 99.33, or 3.7%, to 2824.28

In

New York Stock Exchange

trading, 1.1 billion shares were exchanged while advancers led declining stocks 1,658 to 1,305. In

Nasdaq Stock Market

action 1.9 billion shares traded while gained led 2,269 to 1,973. New 52-week lows bested new highs 43 to 17 on the Big Board and by 122 to 20 in over-the-counter trading.

Miles to Go

Although few were lamenting today's action, Ed Nicoski, chief market strategist at

U.S. Bancorp Piper Jaffray

in Minneapolis, cautioned against complacency regarding the tech sector.

"Yesterday's tape action looked climactic in nature, but I don't think all the problems have vanished," Nicoski said. "Basically, things are going to start to quiet down a bit but I don't think the firepower is there to push this thing up aggressively."

Yesterday's wild action will cause investors to rethink the "merits and demerits" of momentum investing vs. value investing and the merits of having more diversification, the strategist said. "The market is going to become much more quality oriented and secondary 'dream' stocks will remain relatively illiquid and unwanted."

Nicoski recommended investors "continue to diversify into Old Economy stock that have been totally washed out," because they have better risk/reward outlook than most tech names.

"Tech is the leadership, but compared to 6 to 12 months out they're still overbought," he continued. "It's going to take some time to let things settle down."

He declined to recommend specific stocks but noted the action in

Sears

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-- which soared 23% today after posting better-than-expected same-store sales for March -- as an example of the kind of upside available in certain non-tech areas.

Among other indices, the

Dow Jones Utility Average

rose 1.17, or 0.4%, to 294.86; and the

American Stock Exchange Composite Index

climbed 14.19, or 1.5%, to 956.71.

The price of the 10-year Treasury note rose 4/32 to 104 19/32, its yield declining to 5.88%.

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

.