NEW YORK (CNNfn) - A promising rally ended on Wall Street Thursday where it had started, in the hot technology sector.
Selling in two major stocks, Intel and Microsoft, prompted other technology investors to cash in on the sector's spectacular recent gains and eventually dragged the rest of Wall Street off the day's highs.
The Dow Jones industrial average closed 11.71 points higher at 8,935.58, after briefly popping above 9,000 in the morning. Trading volume on the New York Stock Exchange reached 665 million shares, with advances trailing declines 1,380 to 1,615.
The Nasdaq Composite slipped 14.51 to 1,863.25. Before Thursday's negative close, the index, heavily weighted with technology stocks, had gained almost 10 percent in the past week. The broader S&P 500 index inched down 3.60 to 1,129.28, after briefly hitting an all-time high of 1,142.04. (Look here for the performance of widely held stocks.)
The bond market closed mixed, hurt by a stronger-than-expected first-quarter gross domestic product report but helped by renewed strength in the dollar. The benchmark 30-year Treasury bond inched up 8/32 of a point in price to yield 5.64 percent.
The dollar resumed its climb against the Japanese yen as investors nervously eyed President Clinton's visit to China for any indication of future yen-supporting interventions. China has held a firm position in the face of a sliding yen and has so far resisted a devaluation of its own currency, the yuan. However, further declines in the yen could force Beijing to devalue the yuan and that, in turn, could trigger a new Southeast Asian currency meltdown.
Last week's currency market intervention, in which the Federal Reserve and the Bank of Japan joined forces to prop up the yen, changed Wall Street's psychology, said Alfred Kugel, senior investment strategist at Stein Roe & Farnham. Feeling somewhat relieved, investors are now more comfortable focusing on positive U.S. economic fundamentals. (516K WAV) or (516K AIFF)
Most tech stocks still hot
Hopes that Clinton's visit to China will help expand trade with the world's most populous nation and fastest growing economy took the shape of heavy buying in the technology sector in the morning. High-technology companies, whose revenues have been stung by the Asian crisis, stand to benefit from a recovery in the Pacific Rim that could be led by China.
Also feeding optimism on the sector, shares of computer network equipment maker 3Com (COMS) soared 4-3/8, or more than 16 percent, to 31-1/2. Late Wednesday, 3Com said its fiscal fourth-quarter earnings rose 52 percent from a year earlier, beating Wall Street expectations.
However, two technology heavyweights took a beating. Intel (INTC) slid 1-3/4 to 75-5/8 after admitting it had found a fault in its upcoming Pentium II Xeon processor, a chip aimed at the server and workstation market. Microsoft (MSFT) slipped 3-3/8 to 101-9/16 after its new Windows 98 operating system hit the stores at midnight Wednesday, generating much less consumer enthusiasm than its predecessor, Windows 95. Microsoft's stock closed at all-time highs Tuesday and Wednesday.
Other big names in the sector turned mixed, with Dell (DELL) slipping 1-1/4 to 92 and Dow component IBM (IBM) climbing 7/16 to 112-7/16.
And Internet stocks continued to sizzle. Mindspring (MSPG), an Internet service provider, soared 14-5/16, or almost 18 percent, to 94-7/8 after announcing a 3-for-1 stock split. Search engine Yahoo! (YHOO) rose 3-1/2 to 152-1/4.
Elsewhere, shares of ITT Industries (IIN) rallied 1-1/8 to 35-3/16 on news the company is selling its electrical systems business to French Valeo SA for $1.7 billion cash.
And shares of famed retailer Saks Fifth Avenue (SKS) surged 2-11/16, or almost 11 percent, to 27-1/2 after its owner, Bahrain-based investment bank Investcorp International, confirmed it is seeking a buyer.
Finally, Mellon Bank (MEL) soared 3-3/4 to 74-1/2, on rumors Chase Manhattan (CMB) is interested in buying the regional bank. 
-- by staff writer Malina Poshtova Zang
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