Blue Chips Lead Dow Back Up; Nasdaq Slips

A late blue-chip rally carried the Dow Jones industrial average back toward record levels Wednesday, masking another uninspiring performance by the overall stock market.

The Dow rose 116.83 points to 9,171.48, about 40 points from the May 13 record of 9,211.84, bouncing back strongly from a decline during the afternoon.

Broad-market indicators were mixed, with the technology-heavy Nasdaq composite index posting the sharpest loss after a healthy profit report from Dell Computer failed to fulfill Wall Street’s more optimistic forecasts.

With buyers continuing to steer clear of non-blue-chip names, analysts said the market would likely remain handcuffed in the narrow range of recent weeks. While the Dow has set records twice in the past two weeks, other popular indexes haven’t hit new highs in nearly a month.

“We’re still biased to the upside, but the pace of trading has become lackluster, which is making it difficult to get a real move started,” said Gregory Nie, technical analyst at Everen Securities in Chicago.

Until the late turnaround, the session was dominated by the lethargic pace that took hold Tuesday afternoon, when the Federal Reserve Board concluded its latest strategy meeting with no increase in interest rates.

The Fed’s decision, while expected, came as a relief with the central bank recently hinting that it might slow the economy to guard against inflation. A future increase in rates has not been ruled out, however, leaving a cloud over the market.

A Commerce Department report Wednesday morning that the U.S. trade deficit widened to a record $13.03 billion in March was taken as a sign that Asia’s financial crisis is cooling off the U.S. economy, something that may reduce the odds of a rate increase by the Fed.

Leading the Dow’s turnaround were Disney, up $3.69 to $114.63; American Express, up $3.63 to $106.13; McDonald’s, up $3.06 to $65.88; General Electric, up $2.81 to $85.69; and AT&T;, up $2.44 to $58.88.

The Standard & Poor’s 500 rose 9.54 points to 1,119.06, about 11 points from the record of 1,130.54, set nearly a month ago on April 23.

The Nasdaq composite fell 14.12 points to 1,831.75, with Dell Computer sliding $2.84 to $91.75 as the most active issue following late Tuesday’s profit report.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, while in Nasdaq trading, decliners outnumbered advancers by a 4-3 margin.

NYSE volume totaled 597.29 million shares as of 4 p.m., up from Tuesday’s lower-than-average tally of 570.42 million.

The NYSE composite index rose 4.71 points to 578.63, about 7 points from record terrain, while the American Stock Exchange composite index fell 0.47 point to 732.22.

The Russell 2,000 index of smaller companies fell 2.32 points to 468.54.

Overseas, Tokyo’s Nikkei stock average rose 0.7%, Frankfurt’s DAX index rose 2.3% and London’s FTSE-100 rose 0.5%.

Among other market highlights:

* Marsh & McLennan rose $3.69, or 4.2%, to $91.13 as the world’s largest insurance brokerage said its board approved a buyback of as many as 4 million shares. The company also declared a 3-for-2 stock split and said it planned a dividend increase of 20%.

* Marriott International rose $1.88, or 5.6%, to $35.56 after shareholders rejected the hotel company’s new stock structure, which used two classes of shares with different voting rights. The action represents a victory for institutional investors and labor critics, who had objected that the dual-class setup served primarily to entrench the Marriott family’s voting power and to protect against unsolicited takeovers.