The Nasdaq composite index jumped 178.89, or 4 percent, to 4,446.45; the Standard & Poor's 500 index added 15.01 to 1,516.35.
The Dow finished a hair lower, falling 2.79 to close at 11,111.48, led by J.P. Morgan and Alcoa.
The CNET tech index rose 118.57 to 3,362.40, led by shares of Inktomi and Cabletron Systems.
Winners edged out losers, with 84 of the 98 stocks in the index rising, 13 falling and one remaining unchanged.
Of the 18 sectors tracked, computer memory storage and semiconductor equipment companies posted the sharpest gains, rising about 7 percent and 6 percent, respectively. Communications companies were the day's largest losers, falling a slim 0.12 percent.
Intel closed up $7 at $136.81, while Microsoft rose $3.06 to $89.06. Lawyers for the company are preparing the first stages of about 115 civil lawsuits that could expose the software giant to more than $7 billion in damages.
The initial public offering of Numerical Technologies, a chip design software company, was the biggest percentage gainer on the Nasdaq Stock Market. Shares jumped $21.56, or 154 percent, to $35.56. Volume topped 9.4 million shares.
Among members of the CNET tech index, Inktomi and Cabletron Systems posted strong gains.
Inktomi rose $25, or 16 percent, to $180.88; Cabletron rose $4.88, or 20 percent, to $29.38 on volume of 7.8 million shares on heavy options-related activity.
Qualcomm rose $13.13, or 9 percent, to $152.25. Prudential Volpe Technology analysts reiterated their "strong buy" rating on the stock.
Internet retailer eToys fell $1.06, or 12 percent, to $8.13.
Shares of Tellabs posted modest gains after the company warned of lower profits yesterday. Its stock rose 25 cents to $58.38.
Shares of Activision fell $3, or 27 percent, to $8.06 on a volume of 8.5 million shares--more than 21 times the stock's daily average. The company said it will restructure its business for the Internet and cut jobs.
The Philadelphia semiconductor index rose 66.70, or 5 percent, to 1,223.27, led by chip designer Rambus, which gained $24.56, or 11 percent, to $246.56.
Shares of Healtheon/WebMD surged $7.50, or 35 percent, to $29.19 on volume of 16.8 million shares, more than three times the stock's daily average. Silicon Valley pioneer Jim Clark and venture capitalist John Doerr invested $220 million in the Internet-based health services network.
Shares of Sun Microsystems rose $6.13 to $98.81 as the company disputed some analysts' claims that its next-generation server computers may arrive later than the company had hoped.
PSINet's stock may see heavy trading Monday. The company said after the closing bell that it has filed to increase its outstanding shares from 530 million to 2.06 billion. Shareholders will vote on the matter May 15. PSINet closed up $2.13 at $32.63 on volume of 4.8 million shares, more than twice its daily average.