Market Close: Tech stocks gain ground

High interest rates in the bond market interrupted a furious early rally but technology stocks managed to maintain their momentum. The Nasdaq composite gained 40 points to 2,366.60 while the Dow added 19 points to close at 11,026.15.

After surging more than 95 points, the Dow lost some steam as interest rates in the bond market edged closer to the 6 percent level, threshold that concerns many investors.

``Investors are becoming very wary of what's been happening in the bond market now that (Federal Reserve Chairman Alan) Greenspan has raised the idea of inflation, and I think hour-to-hour moves in stocks may follow bonds for now,'' said James Volk, co-director, institutional trading, D.A. Davidson and Co.

For the second day in a row, hardware and Internet stocks picked up ground.

Intel Corp. (INTC) added 1 11/16 to 62 5/16 while IBM Corp. (IBM) and Advanced Micro Devices Inc. (AMD) gained 2 3/8 and 3/4 a share, respectively.

America Online Inc. (AOL) charged up 11 1/16 to 139 3/8 after unveiling its designs to attack the television market. AOL is buying $300 million worth of set-top boxes from Philips Electronics NV (NYSE: PHG) and is partnering with DirectTV and Hughes Electronics to develop its own Web TV product.

Yahoo! Inc. (YHOO) hustled up 18 5/16 to 174. Excite Inc. (XCIT) trimmed 7/16 to 158 1/2 and Amazon.com Inc. (AMZN) moved up 1 1/2 to 148 3/8. Lycos Inc. (LCOS) shares fell 7 to 98 ? after Monday's on speculation that USA Networks Inc. (Nasdaq: USAI) may drop its acquisition plans. Infoseek Corp. (SEEK) tacked on 1 1/2 to 53 7/8.

TheStreet.com Inc. (TSCM) closed up 41 to 60 in its initial public offering. Shares opened at 61 after pricing its 5.5 million share offering at $19 a share last night. Maker Communications Inc. (MAKR) picked up 9 5/8 to 22 5/8 in its IPO. Shares opened at 19 5/16 after pricing at $13 a share in its 3.35 million share initial offering.

Cisco Systems Inc. (CSCO) rallied up 2 5/8 to 111 7/8 ahead of its third quarter results. Ascend Communications Inc. (ASND) closed up 1 1/2 to 96 1/2 and 3Com Corp. (COMS) fell 3/16 to 27 7/16.

Meridian Data Inc. (MDCD) rose shot up 4 1/16 to 7 9/16 after Quantum Corp. (Nasdaq: QNTM) agreed to acquire the company.

Among widely held PC stocks, Dell Computer Corp. (DELL) rose 3/8 to 42 5/8; Compaq Computer Corp. (CPQ) was unchanged at 26 1/4; Gateway Inc. (GTW) added 1 15/16 to 68 11/16 and Apple Computer Inc. (AAPL) closed off 1/2 to 44 3/4.