MARKET CLOSE: Techs revive in the afternoon

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The technology picked itself up off the ground in the afternoon to carry the Nasdaq higher.

After being down for most of the day, the tech-heavy Nasdaq Composite Index ended the session up 53.28 to 3,940.35, thanks to a surge of buying in the last two hours of the day. the S&P 500 moved up 34.30 to 1,394.46 and the Dow Jones Industrial Average picked up 201.66 to 10,940.53, largely on the strength of financial stocks. Inter@ctive Week's @100 Index increased 180.59 to 5,875.73.

The U.S. Federal Reserve is widely expected to raise interest rates by 25-basis points at the conclusion of its two-day meeting, which begins on Tuesday. A more aggressive, 50-basis point hike is only a slim possibility, analysts said. Analysts said a rate hike has already been factored in to banking stocks, which have been hit hard in recent weeks.

"We are on Fed watch after Friday's mess," Josephthal Lyon & Ross chief investment officer Larry Rice told Reuters. "It is a flight to safety because people are nervous. It's the fact that the Nasdaq has been in a vertical ascent for the past two years. The Nasdaq has to come back to earth."

Technology stocks in the news:

3Com Corp.(Nasdaq: COMS) defied the downward trend and advanced 5 percent, or 4 3/16 to 50 3/4 on high volume after it announced the terms of Palm Inc.'s IPO, and received an upgrade from SG Cowen.

Qualcomm (Nasdaq: QCOM) gained 16 7/16 to 127 as the most heavily traded stock on U.S. markets. News reports indicate the CDMA chipmaker is close to signing an agreement with China United Telecom, China's second largest telephone company.

Chinese wireless phone maker Qiao Xing Universal Telephone (Nasdaq: XING) advanced 9 1/8 to 41 after the company, which is trying to get CDMA licensing, announced it would receive tax exemptions for the next six years.

Musicmaker.com (Nasdaq: HITS), down 1/4 to 6 7/16, said it has retained an investment bank to examine strategic alternatives following the recent EMI-Time Warner and Time Warner-America Online deals.

FreeMarkets, Inc. (Nasdaq: FMKT) plunged 42 13/16 to 229 after it beat First Call's expected loss of 31 cents a share. The business-to-business online auctioneer also reassured investors that the departure of customer General Motors won't impact revenue or operations in 2000.

Amazon.com Inc. (Nasdaq: AMZN) lost 2 7/8 to 64 9/16 after it announced the company would take a 5 percent stake in Audible (Nasdaq: ADBL), up 1 to 15 1/2. Audible also reported a smaller than expected loss. Yahoo! (Nasdaq: YHOO) fell 8 9/16 to 322 1/16.

America Online Inc (NYSE: AOL), down 2 to 56 7/8 has signed deal with Netcentives Inc (Nasdaq: NCNT), up 6 3/8 to 68 1/4, and American Airlines to establish two reward-based customer loyalty programs.

E-business growth will be crucial to a quick turnaround at IBM (NYSE: IBM), said Chairman and Chief Executive Lou Gerstner in an internal memo issued after the company announced its lackluster fourth-quarter earnings on Jan. 19. Shares fell 11/16 to 112 1/4.>