Tech Stocks Rebound; Bank Shares, Bonds Sag

Technology shares staged a stunning comeback Wednesday, lifting the Dow Jones industrial average slightly and sending the Nasdaq Stock Market index to its biggest one-day gain in nearly six weeks.

But U.S. bonds fell a day after the Federal Reserve Board raised interest rates for the first time in more than two years.

The Dow closed up 4.53 points at 6,880.70, while the technology-laden Nasdaq composite index jumped 21.02 points to 1,269.08--still shy of its Jan. 22 high of 1,388.06.

Technology stocks have been beaten down in recent weeks amid questions over whether profits would justify high prices.

For the most part, though, the rebound in companies such as Microsoft, Intel and IBM did not spread to the rest of the market.

“We had a reversal in the malaise in the technology sector, but it did not rub off on the rest of the market,” said Alfred Kugel, senior investment strategist at Stein Roe & Farnham.

Kugel said the market will remain in its current range, saying it is in a “digestion period” after a surge in corporate earnings and a stronger-than-expected economy that stretched from last November to mid-February.

The Fed’s quarter-point interest rate boost Tuesday made shares of companies that ride the ups and downs of the economy less attractive, particular banks. Suddenly technology issues looked cheap.

The latest economic data fanned expectations of further monetary tightening to slow the economy’s growth.

The Commerce Department said durable-goods orders rose 1.5% in February, contrasting with analysts’ expectations for a 0.4% drop after January’s strong gain of 4.1%.

The unexpected February orders pickup suggests the economy’s industrial sector remains vigorous and may be gaining momentum.

The rate hike will mean higher borrowing costs for consumer and corporate loans. Many commercial banks, including Chase Manhattan, the nation’s largest bank, boosted their lending rates in response to the Fed move.

Investors are worried the action could hurt corporate profits as consumers cut back on spending.

In the bond market, the benchmark 30-year Treasury bond fell, raising its yield to 6.98% from 6.97% on Tuesday.

Wall Street firms struggled to find buyers for the $12.5 billion of five-year notes they bought from the Treasury and briefly drove yields over the 7% mark. The government also sold about $13.78 billion of one-year bills.

Advancing issues outnumbered decliners by a 10-9 margin on the New York Stock Exchange, where trading was moderate.

The Standard & Poor’s 500-stock list rose 1.43 points to 790.50. The NYSE’s composite index fell 0.04 point to 415.37. The Russell 2,000 index of small-capitalization stocks rose 1.61 points to 352.31 and the S&P; 400 mid-cap index rose 1.07 points to 261.42.

Among Wednesday’s highlights:

* The Dow was led by IBM, up 4 3/8 to 140 1/4, and Eastman Kodak, up 1 1/8 to 78 1/4.

* Nasdaq was boosted by Intel, which shot up 7 3/8 to 140 5/8, and Microsoft, which advanced 3 15/16 to 94 1/4.

Other tech gainers included Linear Technology, up 1 1/8 to 46 3/4; Texas Instruments, up 3 7/8 to 81 1/8; Motorola, up 2 1/8 to 60 1/2; Micron Technology, up 2 1/8 to 40 7/8; and LSI Logic, up 2 1/4 to 36.

* Oil issues also advanced. Exxon rose 3 5/8 to 109 3/8, Royal Dutch Petroleum rallied 2 3/8 to 177 7/8, Texaco advanced 1 3/8 to 109 3/4, Amerada Hess climbed 7/8 to 54 5/8 and Chevron added 1/2 to 72 1/8.

* Banks, which see profits harder to come by when interest rates go up, declined. Citicorp fell 2 1/8 to 113 5/8, Chase dropped 1 7/8 to 99 7/8, BankAmerica lost 2 3/4 to 109 1/4, NationsBank fell 1 1/4 to 59 3/4, Banc One dropped 1 to 42 3/4, First Union fell 1 5/8 to 87 1/8, PNC Bank fell 3/4 to 43 1/8 and J.P. Morgan dropped 7/8 to 105 1/2.

* Basic-industry stocks that are vulnerable to an economic downturn were also losers. DuPont was the biggest drag on the Dow, dropping 2 3/32 to 109 7/8.

* Gold issues gained on reports that Bre-X Mineral’s Indonesian gold find, touted just last week as the world’s largest, may be a flash in the pan. That would mean world reserves are significantly lower than previously estimated. Newmont Mining rose 1 1/2 to 41 3/8, Santa Fe Pacific Gold gained 5/8 to 17 7/8 and Placer Dome rose 1/4 to 19 1/4. Trading of Bre-X was halted on the Toronto Stock Exchange.

At the Commodity Exchange in New York, gold prices closed higher on the news. June gold closed $3 an ounce higher at $353.50.

* Trans World Airline lost 7/16 to 7 3/16 one day after the company said its auditors expressed reservations about its ability to continue as a “going concern.”

* Viacom fell 3 3/8 to 32 1/2 and Young Broadcasting dropped 5 to 22 1/4 after Merrill Lynch lowered their stocks’ ratings.

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Market Roundup, D6