NEW YORK (CNNfn) - Wall Street's Friday rally, wobbly in the morning, picked up steam in afternoon trading as investors rushed to pick bargains among leaner technology and financial shares after a four-day melee that left many stocks reeling in pain.
Shortly after 1:30 p.m. the Dow Jones industrial average rose 55.61 points to 7,787.52. Advances led declines 1,602 to 1,414 as 540 million shares changed hands on the New York Stock Exchange.
The Nasdaq Composite, which lost more than 12 percent in the first four days of the week, surged 39.81, or 2.8 percent, to 1,458.93. The S&P 500 index rose 9.41, or 1 percent, to 968.41. (Click here for a look at today's CNNfn market movers.)
Still, many investors remained nervous about the future of the global economy and the direction of the world's markets. A relatively stable dollar after two days of heavy pummeling and gains in stock markets overseas gave little comfort to weary stock traders. Instead, market participants drew optimism from speculation that the Federal Reserve may lower interest rates sooner than its next policy meeting on Nov. 29, a move that would be highly unusual for the Fed.
A rate cut of 1/4 of a percentage point two weeks ago disappointed the market and resulted in two days of heavy selling in stocks as investors deemed to move too small to make a difference.
The bond market once again was mixed. The benchmark 30-year Treasury bond plummeted 1-20/32 points in price, raising the yield to 5.10 percent. But the short-end of the market, Treasury securities maturing in less than 2 years, traded in positive territory, still attracting investors seeking quality amid the stock market's volatility.
The dollar fell against the Japanese yen as investors saw no sign that central banks might intervene in the market to boost the greenback. The dollar traded slightly higher against the German mark.
Leading down, leading up
In stocks, technology and financial blue chips, the most volatile and hardest hit market sectors in this week's tumultuous run, were the leaders on the upside as investors sought bargains among these cheapened stocks.
On the Nasdaq, shares of Dell Computer (DELL) rallied 2-3/4 to 51-3/16, Intel (INTC) gained 2-15/16 to 81-3/8, Microsoft (MSFT) jumped 3-11/16 to 94-7/8 and Cisco Systems (CSCO) climbed 2-5/16 to 49.
Among Big Board technology blue chips, Dow component IBM (IBM) rose 1-7/8 to 125-3/8.
But financial stocks, whose late rally was largely responsible for the Dow's last-hour recovery from a 270-point tumble Thursday, put in a mixed show.
Shares of Dow member Citigroup (CCI), the day-old union of Citicorp and Travelers, rose 1 to 33-1/2. Fellow Dow member J.P. Morgan (JPM) gained 2-5/8 to 82-1/2 and American Express (AXP) rose 13/16 to 73-3/16.
Shares of Chase Manhattan (CMB) gained 1-1/16 to 41-9/16, BankAmerica (BAC) rose 1 to 50-5/8 and Bankers Trust (BT) climbed 1 to 55-1/2.
In the brokerage niche, Merrill Lynch (MER) rose 3/4 to 43-1/4 and Lehman Brothers (LEH) gained 7/8 to 30-5/16.
Among the day's newsmakers, shares of the country's number one provider of medical supplies to hospitals, Allegiance (AEH), rallied 8-15/16, or almost 39 percent, to 31-15/16 on news Cardinal Health (CAH) is buying the company in a stock deal valued at $4.5 billion. Cardinal's stock tumbled 10-1/16, or almost 11 percent, to 82-5/8, leading the list of losers on the Big Board.
Investors' reception to the day's other deal was less warm. Shares of computer management firm Inacom (ICO) lost 2-3/16, or more than 13 percent, to 14-5/8 and Vanstar (VST), a computer reseller and consultant, slipped 1-1/4, or almost 15 percent, to 7-1/8. Inacom has agreed to buy Vanstar in a deal that would create a company with $7 billion in revenue and a workforce of more than 12,000. 
-- by staff writer Malina Poshtova Zang
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