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MARKET CLOSE: Fed raises rates; techs up slightly

As expected, the Federal Reserve Board bumped short-term interest rates up one-quarter of a percent Wednesday, resulting in a rather languid reaction on Wall Street. The Nasdaq composite added 22 points to 4,073.96 while the Dow lost 38 points.

The Fed raised the fed funds rate for overnight loans between banks to 5.75 percent from 5.50 percent, and increased its discount rate to 5.25 percent from 5.50 percent.

At the same time, the Fed announced that it is worried that excess demand growth could foster inflationary imbalances.

"No major surprise," said Doug Porter, an economist at Nesbitt Burns Securities. "Basically what the market was looking for, so I suspect market reaction will be muted. If there is any concern it might be a sense that the Fed might be falling a little bit behind the curve, but I think they've tried to dampen that concern with this new bias basically priming the market for another rate hike in March."

With the exception of some leading Internet stocks, most technology stocks closed lower.

Dell Computer Corp. (DELL) shaved off 13/16 to 38 1/8. Gateway Inc. (GTW) closed unchanged at 59 3/4 while Apple Computer Inc. (AAPL) and Compaq Computer Corp. (CPQ) lost 1 7/16 and 1 1/16 a share, respectively.

Telaxis Communications Corp. (Nasdaq: TLXS) closed up 30 1/2 to 47 1/2 in its initial public offering.

Intel Corp. (INTC) closed off 1 3/8 to 100 1/16. Advanced Micro Devices Inc. (AMD) shed 9/16 to 36 and International Business Machines Corp. (IBM) added 4 to 114.

Business Objects (Nasdaq: BOBJ) easily beat Wall Street consensus estimates with fourth quarter earnings of $9.5 million, or 23 cents a share. Its shares rose 9 11/16 to 84 15/16.

Inso Corp (Nasdaq: INSO), a publishing software maker, was hammered after Banc of America cuts it to "market performer" from "buy." Its shares closed off 20 1/2 to 14 3/4 after warnings of a fourth-quarter sales shortfall.

America Online Inc. (AOL) shot up 4 7/16 to 59 11/16. Yahoo! Inc. (YHOO) rallied up 10 5/8 to 328 while Inc. (AMZN) and eBay Inc. (EBAY) gained 2 and 1/16 a share, respectively. Excite@Home Corp. (ATHM) moved up 2 13/16 to 38 and Lycos Inc. (LCOS) trimmed 1 5/8 to 72 15/16.

Ticketmaster Online-CitySearch (Nasdaq: TMCS) closed up 3 3/4 to 40 after it said it would buy 2b Technology, a privately held ticketing firm for about $23 million.

Microsoft Corp. (MSFT) fell 2 1/8 to 100 13/16 and Oracle Corp. (ORCL) inched up 5/16 to 54 5/16.