NEW YORK (CNNfn) - The Dow Jones industrial average climbed for the first time in three sessions Wednesday as bargain hunters bought drug makers and industrial companies cheapened by a two-day sell-off.
And the Nasdaq composite index, which set 14 record highs this year, came within 17 points of No. 15, as investors renewed their love affair with high-growth technology stocks such as Oracle and Microsoft.
For a change, buyers flocked to Dow components Merck, Johnson & Johnson, Caterpillar and International Paper -- all hammered Tuesday when a profit warning from Procter & Gamble shook Wall Street.
"It's kind of a normal rotation," said Kenneth Sheinberg, head of listed trading at SG Cowen. "Some of these beaten-up groups are getting some sponsorship."
The Dow rose 60.50 points, or 0.6 percent, to 9,856.53, a day after posting its fourth-biggest point drop in history. The index of 30 blue-chip stocks fell a combined 570 points Monday and Tuesday, wiping out all of last week's gains. 
The tech-heavy Nasdaq, meanwhile, rose 49.42 points, or 1 percent, to 4,897.26, closing in on the 4,914.79 record set Friday.
The broader S&P 500 rose 11.08 points, or 0.82 percent to 1,366.70.
Still, more stocks fell than rose. Declining issues on the New York Stock Exchange beat advancing ones 1,550 to 1,421. Volume topped 1.1 billion shares. Nasdaq losers beat winners 2,374 to 1,894. More than 1.9 billion shares changed hands.
The dollar rose against the yen but fell versus the euro. Treasury securities ended little changed. 
Dow, for now, finds bottom
Among Dow stocks, drug and industrial companies led the partial rebound from Tuesday's 374-point tumble.
Merck (MRK: Research, Estimates) surged 2-3/4 to 56-11/16 and Johnson & Johnson (JNJ: Research, Estimates) gained 2-11/16 to 71-3/16.
Caterpillar (CAT: Research, Estimates) jumped to 1-1/8 to 34-15/16 and International Paper (IP: Research, Estimates) leapt 2-5/8 to 36.
But Procter & Gamble (PG: Research, Estimates) apparently wasn't cheap enough. The maker of Crest, Tide and Pampers fell 3-3/16 to 57-13/16, a day after an earnings warning wiped out nearly a third of the company's market value.
IBM (IBM: Research, Estimates), another Dow member, rose 2-7/8 to 105-7/8 after announcing a business-to-business e-commerce alliance Wednesday with i2 Technologies Inc. and Ariba Inc.
The alliance lifted i2 (ITWO: Research, Estimates), up 22-3/16 to 190-5/8, and Ariba (ARBA: Research, Estimates), 6-1/2 higher at 331.
Microsoft, a Dow stock and Nasdaq's biggest mover, rose 2-1/2 to 95-3/8. Oracle (ORCL: Research, Estimates) gained 6-15/16 to 81-7/8.
Divergence ahead?
The day's action leaves the Dow down 14.2 percent for the year while the Nasdaq is up 20.3 percent - a divergence that comes as investors chase the technology stocks expected to lead the economy's growth.
With the Federal Reserve expected to keep raising interest rates to slow the economy, investors have shed blue chips, whose profits are seen as more sensitive to tighter credit.
"With rates going higher, I'm staying away from the old-economy stocks," Greg Hymowitz, money manager at EnTrust Capital, told CNN's Street Sweep.
At the same time, money has poured into technology stocks, seen as less reliant on banks for raising capital.
Robert Stovall, market strategist at Prudential Securities, speaking on CNN's In the Money, compared the opposing paths of the Dow and Nasdaq to a double orbit. (381K WAV) (381K AIFF)
Alfred Kugel, senior investment strategist at Stein Roe Farnham, sees the broader moving higher only after the Federal Reserve finishes raising interest rates to slow the economy.
He predicts a quarter-of-a-percent rate hike later this month with the central bank concluding with a final credit tightening in May.
"The economy is in fact going to slow down and slow down appreciably in the second quarter," Kugal told CNNfn's market coverage.
The Fed tightened credit four times since June, bringing its main lending rate to 5.75 percent. But the moves haven't appreciably slowed the economy.
Oil prices, meanwhile, have tripled in the last twelve months. Stock investors fret that this jump in crude prices to nine-year highs could crimp corporate profits for industries reliant on oil.
Oil fell Wednesday after Saudi Arabia and Iran signaled they would increase crude production.
The Dow Jones transportation average, comprised of companies whose profits can suffer when oil prices rise, surged 88.94 points, or 3.9 percent, to 2,352.53 Wednesday.
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