NEW YORK (CNNfn) - Wall Street turned its back to technology stocks Monday, focusing instead on a broad array of shares led by the financial sector, and starting the week with a triple record for the Dow industrials, the Nasdaq and the S&P 500 index.
Many investors had expected just the opposite performance by the market, in the wake of Friday's surprise profit warning by computer maker Compaq -- an announcement that spelled trouble for the entire technology sector. But market players used an opening plunge as a buying opportunity, eventually driving the Dow sharply higher and helping the broader market pull itself above the water as well, even as technology stocks took a beating.
The Dow Jones industrial average roared 165.67 points, or 1.6 percent, higher to 10,339.51, closing at a record high. The broader S&P 500 index advanced 10.28 to 1,358.63, also setting a record.
On the New York Stock Exchange, advances held a slim lead over declines by a margin of 1,670 to 1,317 as trading volume climbed to 805 million shares.
Even the Nasdaq Composite, heavily weighted with technology issues, recovered from a 2.5-percent sell-off at the start of the session, to finish 5.77 points higher at 2,598.82, an all-time high.
"There is life outside the high-tech," said Marshall Acuff, equity strategist at Salomon Smith Barney, who thinks Compaq's problems will help investors look at the broader market and away from the few blue chip stocks that have been market leaders recently. (441K WAV) or (441K AIFF)
The bond market rose, helped first by the nervousness surrounding stocks, then by positive inflation expectations ahead of Tuesday's consumer price index report. The benchmark 30-year Treasury bond gained 5/32 of a point in price for a yield of 5.45 percent.
The dollar also recovered from its early weakness against the yen and moved off its lows against the euro.
Financials trigger the rally
News of strong earnings from the financial services sector helped limit the early losses on Wall Street and later supported the market recovery.
Following a surprisingly strong report by Morgan Stanley Dean Witter (MWD) a couple of weeks earlier, fellow Wall Street player Bear Stearns (BSC) also announced record fiscal third-quarter profit that came in sharply above expectations. Shares of Bear Stearns rose 3/4 to 50-3/8.
Elsewhere among the brokers, Merrill Lynch (MER) gained 1-13/16 to 99-15/16, and Donaldson, Lufkin & Jenrette (DLJ) rallied 8 to 94.
Other financials also moved higher. Chase Manhattan (CMB) advanced 1-5/16 to 86-7/8 and BankAmerica (BAC) inched up 5/8 to 75.
Among Dow components, American Express (AXP) rallied 7-1/16 to 135-7/16, Citigroup (C) edged up 3/8 to 74 and J.P. Morgan (JPM) closed 3/4 higher at 129-1/2.
Compaq's bombshell explodes
Late Friday, after the market closed, Compaq (CPQ), the world's leading PC maker, announced its first-quarter earnings will fall more than 50 percent below expectations. The company blamed slow demand for PCs and pricing pressures for its weak performance, prompting some market analysts to conclude that Compaq's problems could be indicative of the industry as a whole.
At least eight analysts downgraded Compaq's stock, largely to "neutral" from "buy."
As Compaq's shares plunged nearly 22 percent, or 6-3/4, to 24-3/16, the stocks of its competitors were quick to follow suit. Dell Computer (DELL), the leading made-to-order computer manufacturer, fell 1-3/4 to 41-13/16 and rival Gateway (GTW) dropped 2-7/8 to 69-7/8, following a downgrade by Salomon Smith Barney to "neutral" from "buy."
The selling encompassed other areas of the high-tech sector as well. Software maker Microsoft (MSFT) lost 1-1/4 to 93 and chip maker Intel (INTC) shed 4-3/16 to 61-1/4. Cisco Systems (CSCO), the top maker of networking equipment, edged down 3/8 to 117-3/4.
Among the Dow 30, shares of Hewlett Packard (HWP) fell 1-1/4 to 68-3/8 after two downgrades of its stock and even after a statement by the company that revenues and profit in its PC business are growing without a sign of problems similar to Compaq's.
IBM (IBM) shed 2-7/8 to 183-7/16. IBM announced a partnership with Web broadcaster RealNetworks (RNWK), a move aimed at ensuring IBM a large chunk of the growing market for video and audio broadcast over the Internet. Shares of RealNetworks soared 39-1/2, or more than 19 percent, to 247.
Airlines take a hit
Airline stocks joined technology issues in the minus column after an attempted fare hike failed to fly over the weekend. As a result, the Dow transports index fell 34.51 points, or 1 percent, to 3,335.89.
The biggest losers included Delta Airlines (DAL), down 2-1/2 to 69-1/16, United Airlines parent UAL (UAL), off 11/16 to 78-1/4, and American Airlines parent AMR (AMR), losing 13/16 to 67-9/16. Continental (CAI.B), which initiated the fare increase, lost 1-1/16 to 39-13/16.
(Click here for a look at today's CNNfn market movers.)
(Click here for a look at today's CNNfn technology stocks report.) 
-- by staff writer Malina Poshtova Zang
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