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Midday Markets: Nets lead tepid rally

Internet stocks made healthy gains amid a guarded tech rally at midday Tuesday. The Nasdaq skipped up 11.15 to 2,613.59, while the Dow Jones industrial average added 33.24 to 10688.39.

Inter@ctive Week's @Net Index rose 3.34 to 300.

In economic news unrelated to the two-day Federal Open Market Committee, the Commerce Department announced spending rose 0.6 percent in May, and personal income, before adjusting for inflation, rose 0.4 percent. The household savings rate dropped to negative 1.2 percent. There is of course, a Fed spin on the news: it heightens concerns the economy is accelerating at a rate that may provoke the Federal Reserve to apply the interest rate brakes more than 25 basis points. The Commerce Department also reported May's new home sales fell 5.1 percent

Now that Fed chief Alan Greenspan has entered the building, and the announcement he'll make Wednesday is pretty much a sure thing, techs are moving around on real news, or at least rumors. Sequent Computer Systems Inc. (Nasdaq: SQNT) soared 28 percent, up 3 15/16 to 17 15/16, on speculation that IBM Corp. (NYSE:IBM), up 1 5/16 to 123 7/8, is in talks to buy the company.

Compaq Computer Corp. (NYSE: CPQ), up 13/16 to 23 1/8, announced it will sell a majority stake in its AltaVista Internet division to CMGI Inc. (Nasdaq: CMGI), up 9 1/16 to 106 3/4, finalizing a deal that has been rumored for several days.

Other Internet stocks led the midday gains; Amazon.com Inc. (Nasdaq: AMZN) added 6 3/8 to 117 1/16, and America Online Inc. (NYSE: AOL) rose 2 7/16 to 106 1/4, while Yahoo! Inc. (Nasdaq: YHOO) gained 2 3/8 to 157 3/8. Lycos Inc. (Nasdaq: LCOS) was up 3 1/4 to 95 3/4 and Infoseek Corp. (Nasdaq: SEEK) rose 7/8 to 46 1/16. Excite At Home (Nasdaq: ATHM), rose 1 1/4 to 54, and Mindspring (Nasdaq: MSPG), gained 3 11/16 to 44 1/16.

Among PC-makers, Gateway Inc. (NYSE: GTW) fell 11/16 to 60 1/16, Dell Computer Corp. (Nasdaq: DELL) was steady at 37 1/16 and Apple Computer Inc. (Nasdaq: AAPL) moved up 1/4 to 42 13/16.

Seagate Technology Inc. (NYSE: SEG) fell 2 7/16 to 27 3/16 after warning it would miss its earnings target for the fourth quarter. Fellow disk drive maker Western Digital Corp. (NYSE: WDC) fell 1/8 to 6 5/16, while Qauntum (Nasdaq: QNTM) rose 1 5/16 to 24 5/8.

Microsoft Corp. (Nasdaq: MSFT) added 3/8 to 87 1/8 and Intel Corp. (Nasdaq: INTC) rose 1 5/16 to 58 5/16 while Advanced Micro Devices Inc. (NYSE: AMD) gained 3/8 to 17 1/2.

Wit Capital Group Inc. (Nasdaq: WITC) was up 8 9/16 to 35 5/8 after two of the company's underwriters gave the stock a "buy" rating.

Juniper Networks Inc. (Nasdaq: JNPR) slipped 1/8 to 99. Competitor Cisco Systems Inc. (Nasdaq: CSCO) fell 1/16 to 61 7/8. 3Com Corp. (Nasdaq: COMS) was steady at 37 1/4 and Lucent Technologies Inc. (NYSE: LU) picked up 9/16 to 66 1/4.

Oracle Corp. (Nasdaq: ORCL) fell 5/16 to 36 3/8. and Sun Microsystems Inc. (Nasdaq: SUNW) rose 3/16 to 66. MCI Worldcom Inc. (Nadsd: WCOM) was down 2 9/16 to 92 1/2, while AT&T Corp. (NYSE: T) dropped 1/8 to 54 1/2

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