The Nasdaq composite index rose 81.38 to 3,940.34, and the Standard & Poor's 500 index edged up 4.27 to 1,454.27.
The Dow Jones industrial average rose 23.33 to close at 10,527.79 led by Hewlett-Packard and IBM.
"It was widely anticipated that the Fed would not change anything, so I think that we had a little bit of a relief rally today," said Todd Clark, head of listed trading at WR Hambrecht.
Clark also pointed out that the markets will probably trade in an "information void" and remain buoyant until next Friday when the government releases more economic data. "Everybody is thinking, 'Great, now I can go on vacation.'"
The Fed resorts to raising interest rates when it feels the economy is expanding at a fast enough pace to produce inflation. Bumping up rates is thought to make it more expensive for companies to expand and for consumers to buy products with credit.
Some analysts have argued that tech companies are less susceptible to rising interest rates than manufacturers and other industries that borrow heavily to fund their expansion. Others disagree, noting that tech companies count these companies as customers.
"I don't see any reason why (technology) companies would be less affected than any other company," Bank of America Securities economist Peter Kreztmer said.
"If the old economy slows, capital spending slows, and companies are going to be buying less," Kretzmer said. This downturn would eventually filter through the economy and result in reduced demand for technology products and services.
"Each one of these companies has to serve a traditional sector," Bank One economist Greg Mount said. "So tech companies are effected by the profits, bottom line and general health of their customers."
Among large tech companies, shares of HP closed up $7.06 at $123.69, and IBM gained $3.88 to $113.63. Intel rose $1 at $132.38, and Microsoft inched up 13 cents to $78.94.
The CNET tech index gained 18.80 to close at 2,806.71. Winners beat out losers as 59 of the 97 stocks in the index climbed, 37 fell, and one remained unchanged.
Of the 18 sectors tracked, PC hardware and server hardware makers posted the biggest jumps, climbing about 4 percent and 3 percent, respectively. Wireless companies recorded the largest drops of the day, sliding nearly 3 percent.
Genuity's 173.9-million share initial public offering was the most heavily traded issue on the Nasdaq as 121 million shares changed hands. Shares of the Internet services company closed at $9.41, or 14 percent below their offering price of $11.
Among members of the CNET tech index, WorldCom, RealNetworks and CMGI posted strong gains.
WorldCom rose $4.88, or 12 percent, to $44.56. Federal antitrust authorities went to court yesterday to block the proposed merger of telecommunications giants WorldCom and Sprint. Sprint fell $5.63, or almost 10 percent, to $52.75
RealNetworks rose $4.75, or almost 11 percent, to $44.88. RealNetworks and mobile phone giant Nokia announced that the streaming media company's software will be installed in a new generation of cell phones and other Nokia devices. Nokia shares fell $2.50 to $49.38.
Shares of CMGI rose $4.56, or 10 percent, to $49.31. Web giant Yahoo today said it will pay $432 million in stock to acquire CMGI-funded eGroups, an email list service. Yahoo fell $2.38 to $123.56.
The Philadelphia semiconductor index inched lower by 2.90 to finish at 1,170.05, led by chip designer Rambus, which lost $5.81 to close at $102.81.
Palm posted earnings after the markets closed today that narrowly beat expectations. The company also confirmed that a memory glitch could cause data errors in some models of its flagship handheld computers. The shares dipped 50 cents to close at $26.38.