NEW YORK -- Enthusiasm for lower interest rates carried blue-chip stocks higher on Tuesday, but Nasdaq stocks took another beating amid concerns about computer-company earnings.
The Dow Jones industrial average ended a volatile session 22.14 points higher, at 9,297.03. The Dow shot up 112 points in the first hour as interest rates in the bond market declined. It retreated to a 15-point loss, then turned positive again in mid-afternoon. The index flitted between positive and negative for the remainder of the session.
The broader market was weaker. For the second session in a row, investors sold shares of Dell Computer over concerns that the personal computer maker's earnings, scheduled to be released after the close of trading Tuesday, would show a downturn in computer sales.
In its after-market report, Dell confirmed those worries even as profits soared. Dell shares fell 1 1/8 to 88 3/4 .
The technology-heavy Nasdaq composite index was down 8.02 at 2,313.87, after tumbling 83.66 points on Friday. The Standard & Poor's 500 index fared better, closing up 11.74 at 1,241.87.
Some computer companies fared far better than Dell. Also after the close of trading, Hewlett-Packard reported net earnings of 92 cents per share, soundly beating analysts' expectations of 83 cents. Applied Materials reported earnings of 14 cents a share, beating estimates of 6 cents a share.
Hewlett-Packard shares closed down 316 at 16 716. Applied Materials' shares closed at 67 7/8 , up 1.
The advance in blue chips was sparked by a rally in U.S. bonds, after the Japanese minister of finance said the government will step up purchases of Japanese government bonds. The announcement pushed interest rates lower in Japan and boosted the Nikkei stock average by 1.27 percent.
It also supported the U.S. bond market, where the benchmark 30-year bond was up $11.25 per $1,000 of valuation, pushing its yield down to 5.34 percent from late Friday's 5.42 percent.
The lower rates on the 30-year bond sparked a strong rally in financial services stocks. Chase Manhattan shares gained 3 5/8 , to 77 11/16.
The Dow was carried higher by Merck, which gained 3 7/16 to 153 15/16. Merck and Johnson & Johnson announced that their joint Consumer Pharmaceuticals enterprise introduced an improved liquid formula of the popular Mylanta antacid. Johnson & Johnson's shares gained 2 to 86 5/8 .
Dow component Wal-Mart rose 3 3/16 to 87 9/16, pulling other retail stocks with it, after its fourth-quarter earnings results beat analysts' expectations.
While investors, buoyed by the fattening of their stock portfolios, continue to make retail purchases at places like Wal-Mart at breakneck speed, there are signs that they are pulling back from their investments, said William Meehan, market strategist at Cantor Fitzgerald.
"Individuals seem to have curtailed their investment substantially over the last couple of weeks, and most portfolio managers have very little cash. What we have here is a situation where it's not really the economy that's driving the stock market, but the stock market that's driving the economy."
In other market action, the NYSE composite index rose 5.27 to 586.73, and the American Stock Exchange composite index fell 0.28 to 695.84. The Russell 2000 index of smaller companies fell 2.04 to 396.40.
Declining issues outnumbered advancers by 1,550 to 1,539 on the New York Stock Exchange, with 473 unchanged.
NYSE volume totaled 792.65 million shares, down from 824.06 million on Friday.
In foreign stock markets, London's FT-SE 100 index gained 1.42 percent, the DAX in Frankfurt rose 0.52 percent, but the CAC in Paris declined 0.32 percent.