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modestly surge

NEW YORK: Blue-chip stocks closed modestly higher Tuesday as investors shopped for bargains after five straight sessions of losses.

The Federal Reserve's decision to keep interest rates unchanged was widely expected and had little impact on stocks.

The Dow Jones industrial average ended 5.64 points higher at 4,620.42. In the broader market, declining issues led advances 1,143 to 994 on moderate trading of 290 million shares on the New York Stock Exchange.

The Nasdaq Composite index rose 5.59 points to 1,025.29.

"We've entered a trading range where the bulls and the bears don't have the strength to pull themselves out," said William Raftery, technical analyst at Smith Barney.

The Fed's decision to leave interest rates unchanged comes amid signs that the economy is recovering from its brush with recession earlier this year. The Fed lowered rates on July 6 for the first time in nearly three years.

Phil Orlando, a senior vice president at First Capital Advisers, said, "We know inflation is benign and we know the economy is in a slow growth mode and there is nothing overwhelming that forced the Fed's hand at this meeting."

In the bond market, the yield on the Treasury's key 30-year bond edged up to 6.89 percent from 6.87 percent on Monday.

While few traders had expected the U.S. central bank to again lower interest rates, many believe the time is ripe for Germany to ease. Such a move could translate into a good substitute boost for the dollar, which has been rallying recently.

Meanwhile, a revitalised high-technology group helped lift sentiment, but many of those shares didn't fully recoup Monday's losses.

Intel Corp., which helped lead technology stocks lower on Monday with a loss of 4-5/8, gained 2 to 62-1/4 on Tuesday.

Microsoft Corp. jumped 4-13/16 to 99-5/16. Applied Materials rose 5-7/8 to 110-7/8.

"It seems to be tech euphoria again," said Mickey Davis, trader at Salomon Brothers. "As Windows 95 approaches they are going to take up Microsoft and the rest will follow."

On Thursday, Microsoft launches its new Windows 95 operating system, the most anticipated product in the personal computer industry.

More than 75 percent of computer users polled in a recent online survey were planning to upgrade to Windows 95 and more than 67 percent will upgrade within a year, Ziff-Davis Interactive said.

Upjohn Co. topped the NYSE actives list and rose 2 to 43 after analysts upgraded the stock following its planned merger with Pharmacia AB.

Among initial public offerings, Harbinger Corp., an Internet-related software maker, rose 3-1/8 to 15-1/8.

The Standard & Poor's composite index of 500 stocks gained 1.41 to 559.52. The American Stock Exchange index rose 0.18 to 528.39.

The NYSE Composite index of all listed common stocks rose 0.25 to 300.16. The average share was up 4 cents.-Reuter