The tech-heavy Nasdaq composite index jumped 114.95, or 2.5 percent, to 4,572.84, putting the brakes on a slide that trimmed 10 percent from the index between Monday and yesterday.
The Standard & Poor's 500 index added 10.66 to 1,498.58, while the Dow Jones industrial average fell 58.33 to close at 10,921.92.
Despite the recent turmoil, the Nasdaq gained about 12 percent during the quarter, while the Dow has slipped 5 percent.
The CNET tech index rose 66.84 today to close at 3,343.98, led by shares of Qualcomm and Yahoo. Winners edged losers, with 62 of the 100 stocks in the index rising, 36 falling and two remaining unchanged.
Of the 18 sectors tracked, computer distribution companies posted the steepest gain, climbing about 8 percent. E-commerce shares were the day's largest losers, falling 5 percent.
Merrill Lynch analyst Henry Blodget warned in a report today that investors should "increasingly avoid the stocks of any (business-to-consumer e-commerce) companies that are losing market share and need additional funding to achieve profitability. The Internet tide is not rising fast enough to lift all boats anymore."
Some of the other highlights of Blodget's Internet and e-commerce report said:
"The market is transitioning into a more mature phase of growth and...this transition, combined with a massive increase in competition across all Internet sectors, will cause a shakeout and consolidation."
"In Q2 and beyond, we would continue to emphasize IPOs in the infrastructure and business-to-business sectors."
"Sector valuations remain extreme by historical standards, and, as a result, rapid changes in sentiment remain the (e-commerce) sector's biggest risk."
"Our sense is that the leading B2C names will continue to be highly volatile for the next few months and then gradually move to new highs by the end of the year."
Blodget's warnings were a little
These are Merrill Lynch's core Internet and e-commerce holdings, according to a report today by analyst Henry Blodget.
Intel closed up $4.94 at $131.94, and Microsoft gained $2.88 to $106.25. Microsoft announced a minor restructuring late yesterday to help it craft a new generation of Internet-based software and services.
The initial public offering of ArrowPoint Communications, a maker of networking equipment for the Internet, was the biggest percentage gainer on the Nasdaq. The shares jumped $84.48, or 248 percent, to $118.48. Volume topped 8.5 million shares.
Shares of Drkoop.com, a medical information Web site, fell $2.56, or 41 percent, to $3.69 on volume of 3.7 million shares. The company said its cash position was weak.
Among members of the CNET tech index, Qualcomm and Yahoo posted strong gains.
Qualcomm rose $4.09 to $149.31 after an analyst at Salomon Smith Barney upgraded the company to "buy."
Yahoo rose $1.88 to $171.38 on volume of 10.8 million shares. The company made a $150 million investment in Net2Phone along with other companies as the government probes how the Internet portal handles data on its customers.
AT&T also announced that it will invest $725 million in Net2Phone in a strategy that takes direct aim at America Online. AT&T fell $1.50 to $56.31, and Net2Phone rose $3.75 to $59.13.
PMC-Sierra gained $30.44, or 17 percent, to $203.69 on volume of 5.5 million shares.
eBay fell $31.13, or 15 percent, to $176 as more controversy surrounds online auction sites. The Los Angeles Police Department has stepped up its investigation of an alleged auction scam on eBay this week.
Veritas Software and Seagate Technology fell for the second day after the announcement of a complex deal that will make Seagate a public company. Shares of Seagate fell $4.44 to $62, and Veritas fell $14.25 to $131.
The Philadelphia semiconductor index bounced back from yesterday's decline, rising 30.58 to 1,181.89, led by chip equipment maker Altera, which gained $12.88, or 16 percent, to close at $89.25.
Bloomberg News contributed to this report.