NEW YORK (CNNfn) - The Dow Jones industrial average tumbled more than 100 points Wednesday as investors shed many of the high-flying blue chip stocks that sent the index up nearly 6 percent in August.
But the Nasdaq composite index rose to its highest point in five weeks, climbing for the 12th time in 14 sessions, on strength in many of the Internet stocks that never fully recovered from last spring's rout.
A fall in IBM, up 16 percent this month, weighed heavily on the Dow. And General Electric -- 12 percent higher since August began -- also fell, hurting the 30-stock index.
"There's pretty even selling across the board," said Charles Payne, head analyst at Wall Street Strategies. "Some folks are cashing in on their gains to blue chips and are getting ready to buy Nasdaq stocks."
 Looking ahead, Payne sees investors moving into some of the harder-hit, speculative technology stocks, particularly if Friday's closely watched August jobs report shows moderate economic growth.
"To me, if we get the right signal on Friday, we'll see some of that buying go into fallen angels," said Payne. He noted that money-losing Amazon.com has gained in recent days.
Among other gainers: financial stocks. They rose after Credit Suisse Group's $11.5 billion bid for Donaldson Lufkin & Jenrette sparked optimism for more financial mergers to come.
The Dow fell 112.09 points, or 1 percent, to 11,103.01, just above its session low.
But the Nasdaq rose 21.64 points to 4,103.81. That's the highest close since July 24, when the index closed at 4,125.80. The S&P 500, meanwhile, slipped 7.25 to 1,502.59.
 More stocks rose than fell amid light summer trading volume. Advancing issues on the New York Stock Exchange edged out declining ones 1,363 to 1,221, on volume of more than 772 million shares. Nasdaq winners topped losers 2,111 to 1,893, as more than 1.5 billion shares changed hands.
In other markets, Treasury securities edged higher. The dollar was flat against the euro and rose versus the yen.
Big Blue's blues
The Dow's biggest loser, IBM (IBM: Research, Estimates), shed $2.56 to $130.31. Still, shares of the nation's largest technology company in terms of revenue surged this month on positive comments from Wall Street.
Also tumbling, General Electric (GE: Research, Estimates) declined $2.50 to $57.38, retreating from the 52-week high of $60.50 set earlier this week.
 But many financial stocks rose following the latest consolidation news. Credit Suisse Group said Wednesday it was buying the New York investment bank Donaldson Lufkin & Jenrette (DLJ: Research, Estimates) for $11.5 billion, or $90 a share. The move sent shares of DLJ, which surged Tuesday on rumors of the deal, up $4.38 to $88.38.
The buy-out sparked speculation of more mergers to come as investors snapped up companies considered acquisition targets. Brokerage Bear Stearns (BSC: Research, Estimates) rose $2.13 to $65.25 and investment bank J.P. Morgan (JPM: Research, Estimates) jumped $2.06 to $151.06.
Morgan, whose shares hit a 52-week high Wednesday, got some help from ING Barings, which upgraded the stocks to "buy" from "hold."
"There is strength in this group because there is the feeling there will be a lot of consolidation in the sector," Ted Weisberg of Seaport Securities told CNN's Street Sweep.
Some of Nasdaq's hardest-hit Internet shares, meanwhile, lifted the index, which is up nearly 9 percent in August.
Amazon.com (AMZN: Research, Estimates), which hit a 52-week low in July, jumped $3.31 to $42.94. Goldman Sachs reiterated a "buy" rating on Amazon and made positive comments on the online retailer.
CMGI (CMGI: Research, Estimates), the Internet incubator, advanced $5.19 to $45.81 and Yahoo! (YHOO: Research, Estimates) gained $2.25 to $123.25. Credit Suisse First Boston started coverage on the Internet portal with a "buy" rating.
Whirlpool (WHR: Research, Estimates), meanwhile, erased earlier losses to close flat at $37.88 after the appliance maker said earnings over the next two quarters would fall far short of Wall Street forecasts.
LEI dips
In the only major economic report Wednesday, the nation's leading economic indicators fell 0.1 percent in July, the Conference Board said. The figure, designed to forecasts future economic patterns, was weaker than expected.
Still, the data had no apparent market effect. Wall Street is waiting for Friday's release of the August jobs figures, which could gauge whether the nation's tight labor market is loosening enough to keep inflation at bay.
 Concerned about the economy's rapid expansion, the Federal Reserve raised interest rates six times since June, 1999. But the Fed, faced with some evidence of a slowdown, held borrowing costs steady last week. Some analysts see no more credit tightenings this year.
Brian Finnerty, head Nasdaq trader at C.E. Unterberg Towbin, says the outlook for steady interest rate has him bullish on the market for the rest of the year.
"Great earnings and low interest rates is a great environment for buying stocks," Finnerty told CNN's Street Sweep.
He sees the Nasdaq rising about 15 percent in 2000, up from its nearly flat performance year-to-date. 
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