NEW YORK (CNNfn) - Technology stocks staged a dramatic comeback Thursday, with the Nasdaq composite surging nearly 240 points above its session low as bargain-hunting investors poured back into computer networking and software stocks.
Cisco Systems, Sun Microsystems and Oracle -- all battered in morning trading and over the last two weeks -- rose. The gains, which spread to other major indexes, came hours ahead of Friday's report on the job market in July. The closely-watched data could offer clues into whether the Federal Reserve raises interest rates this month.
In a comeback showing how fast Wall Street sentiment can shift, technology stocks, which only hours earlier were shunned, drew buyers.
 But Kenneth Sheinberg, head of listed trading for S.G. Cowen, said both the afternoon gains and the morning losses signify little in a market concerned about how much earnings growth will slow in the months ahead.
"We went down on nothing and we went up on nothing," Sheinberg said. "They shouldn't have opened as weak as they did and they shouldn't have come up as much as they did."
But Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin, told CNN's Street Sweep that the tech-sector's growth prospects justifies the rally.
"This is a high-growth area," Finnerty said. "There's big demand for it."
No one disagreed that the Nasdaq's intra-day swing of nearly 7 percent was statistically stunning. The index rose 101.40 points, or 2.8 percent, to 3,759.86 Thursday after falling as low as 3,521.14, or 137.32 points, in the morning.
"Everyone says (the Nasdaq) has got to retest the lows," said Finnerty, who cited the session's heavy volume as a plus. "I disagree. I think we're going up from here."
 The Dow Jones industrial average, meanwhile, rose 19.05 to 10,706.58, its fourth gain in four sessions. The S&P 500 jumped 13.86 to 1,452.56. The gauge also climbed every day this week.
Still, more stocks fell Thursday. Declining issues on the New York Stock Exchange topped advancing ones 1,532 to 1,330, on volume of 1 billion shares. Nasdaq losers beat winners 2,205 to 1,751, as more than 1.8 billion shares changed hands.
In other markets, Treasury securities rose. The dollar climbed against the euro and fell versus the yen.
Techs rise from the dead
After spending the morning lower, computer networking makers rose, with Sun Microsystems (SUNW: Research, Estimates) jumping 6-7/16 to 107-11/16 and Cisco Systems (CSCO: Research, Estimates) gaining 3-7/16 to 64-3/8.
And Oracle (ORCL: Research, Estimates), the maker of data-base software maker, climbed 4-5/16 to 77-7/16.
Despite these gains, S.G. Cowen's Sheinberg said the focus remains negative.
"All the news that seems to be coming out is companies telling you that things going forward aren't that great," he said.
 Kulicke & Soffa (KLIC: Research, Estimates) sounds like one of those companies. Shares of the world's largest supplier of semiconductor assembly equipment plunged 5-1/2 to 16-5/8, after the company said a delay in orders "may impact financial performance" in the current quarter and in the first fiscal quarter of 2001. The apparent profit warning sent other semiconductor stocks lower.
Applied Materials (AMAT: Research, Estimates), the big chip equipment maker, shed 3-9/16 to 69. Micron Technologies (MU: Research, Estimates), a chip maker trading on the NYSE, lost 2-3/4 to 77-9/16.
Kulicke & Soffa wasn't the only company to scare investors.
Motorola (MOT: Research, Estimates) shed 1/2 to 36-1/8 on fears of a slowdown in its handset business. Based on a Motorola conference call with analysts, Lehman Brothers said in a note to clients that "we expect further pressure on the handset component group."
Other wireless equipment makers joined in the sell-off. Nokia (NOK: Research, Estimates) lost 1-1/2 to 40-1/12 and Ericsson (ERICY: Research, Estimates) shed 1/16 to 18-1/16.
And Gap (GPS: Research, Estimates) fell 2-1/16 to 30-1/16 after saying weak July sales at its stores would cause earnings per share to fall 2 or 3 cents below the current consensus estimate of 23 cents for the quarter ended in July.
Jobs on horizon
The day's activity comes less than 24 hours ahead of the week's most closely watched economic indicator. Analysts Friday will be parsing the government's July employment report for clues about whether the Fed will raise borrowing costs later this month.
Analysts surveyed by Briefing.com expect the unemployment rate remained at 4 percent in July. Employers are seen having added 70,000 jobs during the month, up from 11,000 in June. Average hourly earnings, a key gauge of wage inflation, are expected to have risen 0.3 percent -- below the 0.4 percent jump in June.
 Evidence of an unexpectedly tight labor market, while good for Main Street, would make policy makers fret that employers will bid up wages, sparking an outbreak of inflation that could derail an economic expansion now in its record ninth year. But a slowdown in the job market might convince Fed officials that six credit tightenings since June, 1999, are beginning to bite.
This uncertainty over whether the Fed will hike rates Aug. 22 has paralyzed Wall Street recently, making investors live from one economic indicator to another. Rotating in and out of industry sectors has become common as traders search for opportunities during a time when making money hasn't been easy. All the major stocks indexes are down year-to-date.
Jim Melcher, founder and president of Balestra Capital, told CNNfn's Talking Stocks that the turbulent market is a reflection of out-of-whack valuations. (473K WAV) (473K AIFF) 
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