The Nasdaq composite index rose 75.27 to 4,174.86, and Standard & Poor's 500 index inched up 2.92 to 1,495.84.
The Dow Jones industrial average rose 5.30 to close at 10,788.71 led by Hewlett-Packard and AT&T. HP rose $6.75 to $134.88, and AT&T climbed $2 to $33.88.
The IPO market had one of its best days in months as several new issues jumped in value. Shares of Sunrise Telecom, which makes test equipment for digital subscriber lines, was the biggest percentage gainer on the Nasdaq. The shares surged $25.31, or nearly 169 percent, to $40.31.
The IPO of Triton Network Systems posted the second best gains on the Nasdaq, as shares in the maker of equipment to set up high-speed wireless networks rose $23.44, or 156 percent, to $38.44.
Another IPO, Network Engines, a maker of specialized Web service appliances, finished the day as the third-best gainer on the Nasdaq. The company's shares climbed $12, or about 71 percent, to $29.
Some analysts are now voicing cautious optimism about the technology sector.
"We are positive toward the tech sector," said Brian Rauscher, an investment strategist at Morgan Stanley. "But you won't see the euphoria like there was in the beginning of the year?(Investors) are going to be more selective."
"Investors are warming up to the tech sector, but in terms of earnings, (companies) have to put up or shut up," he added.
Rauscher predicts that second-quarter earnings will be strong but offered a warning. "Companies that miss earnings, even by a penny, are going to get hit," he said.
The IPO market has become discriminating as well. The days of buying a tech stock on a whim and watching it magically rise are apparently over. "The IPO market was never dead; it's become selective," said Jeff Hirschkorn, senior analyst at IPO.com.
"Profitability has started to come to the forefront," he said, adding that "investors are looking for a business model that works, big customers, and backing by (prominent) venture firms."
Earnings news lifted Ariba shares. After the markets closed yesterday, Mountain View, Calif.-based Ariba reported a record $80.7 million in revenue for the third quarter, compared with $11.9 million for the year-ago period and $40 million for the previous quarter.
The maker of e-commerce software posted a net loss of 5 cents per share, excluding non-operating charges, vs. a loss of 11 cents per share last year. Ariba beat Wall Street's forecast of an 8-cent loss, the consensus estimate of 27 analysts surveyed by First Call.
Ariba shares rose $27.69, or nearly 27 percent, to $131.19 on a volume of about 25 million shares, nearly four times more than the stock's average daily volume of 6.3 million.
At the end of regular trading, Intel closed up $2 at $143.19 and Microsoft dropped 38 cents to $79.94.
The CNET tech index gained 97.76 to close at 2,949.33. Winners edged out losers, with 67 of the 97 stocks in the index advancing, 28 declining and two remaining unchanged.
Of the 18 sectors tracked, Internet services and makers of computer data storage equipment posted the most gains, rising 11 percent and 9 percent, respectively. Computer equipment distributors were the day's biggest losers, sliding a slim 0.37 percent.
Online trading companies also posted strong gains. E*Trade climbed $1.81, or 11 percent, to $18.31, and Ameritrade rose $1.94, or nearly 16 percent, to $14.38.
The Philadelphia semiconductor index gained 30.23 to 1,189, led by Motorola, which rose $3.69, or 10 percent, to close at $39.13. The company announced that it expects greater-than-expected earnings from its phone unit.
Shares of telecommunications giant WorldCom rose $3.44 to $47.94 on volume of 45.7 million shares, making it the second most active stock on the Nasdaq behind Cisco Systems.
After much speculation, WorldCom and Sprint canceled their $152 billion merger today amid opposition from U.S. and European regulators who contended it would reduce competition. Sprint climbed 63 cents to $47.94.