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Tech stocks and Nasdaq lead market rally

Stocks rally to reverse earlier losses, with technology issues sparking a surge that pushed both the Nasdaq and Dow into positive territory

    Stocks rallied to reverse today's earlier losses, with technology issues sparking a surge that pushed both the Nasdaq and Dow into positive territory.

    The Dow Jones Industrial Average, which fell as much as 128.73 points earlier today, was up 15.45 points or just under a quarter percent, at 9,132. Today's upward movement comes on the heels of yesterday's 2.32 percent decline, when the blue-chip index shed 216.53 points. The Nasdaq Composite Index, however, managed to dig itself out of a 25.39-point hole, and climbed nearly one percent or 15.55 points to 1,965.12.

    Although analysts had expected a market correction, most are still bullish. The Dow last week touched a record high of 9,374.27.

    Internet stocks, which have gone through the roof recently on optimism that their revenues were likely to increase as more people turn to the Net for holiday gift shopping, tumbled on frenzied profit-taking yesterday and earlier today. But the sector appeared to be turning around in afternoon trading.

    "The blue chips and the Internet [stocks], the places where the excesses took place, are the places where the correction will take place," said Larry Wachtel, vice president of Prudential Securities.

    Peter Cardillo, director of research at Westfalia Investments, said the sell-off in the high-flying Internet sector was good because "it brings some sanity back into the market."

    Indeed, Web stocks generally have turned around to post modest gains today. Web portal Yahoo, for example, climbed 1.5 percent, while online computer products retailer Egghead.com jumped 5.39 percent. America Online crawled up 0.07 percent into positive territory, with 16.1 million shares trading hands, making it the most actively traded issue on the New York Stock Exchange. Web auctioneer Onsale recovered somewhat after plunging 12.2 percent, but still was down 4.78 percent.

    Online book and music retailer Amazon.com, which today announced separate marketing deals with Broadcast.com and Hoover's Online, climbed 3.39 percent. Broadcast.com shed 3.03 percent.

    Other tech issues also turned around after early trading declines, including Dell Computer, which climbed 2.98 percent. The computer retailer was the second most actively traded issue on the Nasdaq market, with 15.8 million shares traded. Microsoft, meanwhile, jumped 2.31 percent, and Oracle surged 5.66 percent.

    Cardillo said that he would not be surprised if the Dow fell below 9,000, but that he expects stocks to move higher before the end of the year.

    "We need to test the 9,000 level before that happens," he added.

    Reuters contributed to this report.