NEW YORK (CNNfn) - Wall Street bounced back Tuesday from the previous day's slide as buyers rushed to load up on beaten down technology shares and led the rest of the market higher.
But gains among blue chip stocks were limited. Fears that the Asian economic crisis will dent U.S. corporate earnings continued to weigh on the market, intensified by a new batch of profit warnings and analysts' earnings estimate cuts.
According to First Call, the Wall Street firm that tracks consensus earnings estimates for U.S. corporations, 64 percent of all second-quarter earnings pre-announcements so far have been negative, an unusually high number at this stage of the quarter.
The Dow Jones industrial average finished 37.36 points higher at 8,665.29. Market breadth on the New York Stock Exchange was positive, with advances leading declines 1,842 to 1,151 as 669 million shares changed hands.
The Nasdaq Composite bounced up 37.37, or 2.18 percent, to 1,753.12 and the broader S&P 500 index rose 10.57, or just under 1 percent, to 1,087.58. (Look here for the performance of widely held stocks.)
"I still think we're in a consolidation mode," said Chris Grisanti, director of research at Spears, Benzak, Salomon & Farrell. "I think you'll see some profit taking still for the next couple of weeks, but then we're in line for a summer rally." (133K WAV) or (133K AIFF)
Grisanti's views that low interest rates and the strength of the U.S. economy are going to pull the market higher eventually were backed by one of Wall Street's most respected market analysts. Earlier in the day, Goldman Sachs' Abby Joseph Cohen said her bullish outlook on the market hasn't changed and she still expects strong gains for stocks this year.
Meanwhile, the dollar plunged against the Japanese yen amid reports that U.S. Deputy Treasury Secretary Lawrence Summers plans to have emergency meetings with Japanese finance officials discuss the yen's slide, Japan's economic recession and the lengthy turmoil that continues to roil Southeast Asian financial markets. Treasury Secretary Robert Rubin said a final decision on the meeting has yet to be made.
The dollar's tumble quickly hurt the bond market, where the benchmark 30-year Treasury bond lost 1-3/32 points in price and saw its yield rise to 5.65 percent.
A cautious rebound
In stocks, investors struggled to find their equanimity after Monday's sell-off, with many picking bargains in the battered technology sector.
Dow component IBM (IBM) was a noticeable exception to the market's comeback, with shares of the blue chip sliding 2-1/4 to 110 after an influential Merrill Lynch analyst lowered his earnings forecasts for the company. Citing the strength of the dollar for his softened estimates, analyst Steven Milunovich lowered his second-quarter earnings estimate for IBM to $1.45 a share from $1.52. Milunovich cut his full-year forecast to $6.35 from $6.45 a share.
Other bellwether technology issues, however, seemed to find buyers. Shares of Dell (DELL) rose 4-23/32 to 84-31/32, Intel (INTC) climbed 2-15/16 to 69-13/16 and Microsoft (MSFT) gained 3-15/16 to 89-7/8.
Separately, Microsoft agreed to sell its SoftImage special effects software to Avid Technology (AVID), a leading maker of video editing software, for about $285 million. As part of the deal, Microsoft will take a 9.1 percent stake in Avid.
Meanwhile, blue chip stocks felt pressure from losses in another Dow component, Coca-Cola (KO), which shed 5/16 to 79, after Merrill Lynch lowered its 1998 and 1999 earnings estimates for the multinational soft drink concern. PaineWebber followed suit and cut its earnings estimates for Coca-Cola.
Tuesday also couldn't pass without its dose of profit warnings. Shares of Manpower (MAN) tumbled 10-1/2, or 27.5 percent, to 27-11/16, after the international employment agency said second-quarter earnings will fall sharply below results from the same quarter a year earlier.
On the positive side, Solectron (SLR) rallied 3-5/8 to 40-5/8 after the electronics firm met expectations by delivering higher fiscal third-quarter results, and announced it had entered a computer manufacturing deal with Ingram Micro (IM).
In the day's deals, shares of Boston Scientific (BSX) gained 1-3/4 to 62-3/4 on news the medical device maker is buying Pfizer's (PFE) Schneider Worldwide division for about $2.1 billion. Schneider, a maker and marketer of catheter-based technologies, has its headquarters in Switzerland. Pfizer rose 1-11/16 to 109-11/16.
And United Rentals (URI) jumped 2-3/8 to 35-3/4 after agreeing to buy rival U.S. Rentals (USR) in a stock deal valued at $1 billion. U.S. Rentals gained 3-5/16, or almost 11 percent, to 33-1/2. 
-- by staff writer Malina Poshtova Zang
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