NEW YORK -- Technology shares surged Thursday, driving the Nasdaq market to another record high as investors switched from interest-rate sensitive shares and moved into Internet-related companies.
Meanwhile, blue chips slipped as rising crude oil prices fueled fears the Federal Reserve will drive interest rates higher to head off any threat of accelerating inflation.
Technology shares, such as Cisco Systems (CSCO) continued to surge amid expectations that their growth will be so rapid that an increase in borrowing costs will only make a minor dent in their earnings.
Based on unofficial closing figures, the Dow Jones industrial average ended down 55.53 points, or 0.52 percent, at 10,643.63.
The Nasdaq composite index finished up 122.40 points, or 2.81 percent, at 4,485.64, beating Tuesday's record close of 4,427.50. It was the fifth-largest point gain for the Nasdaq.
"Technology will continue to lead into the next year," said George Rodriguez, senior vice president at Guzman & Co. of Jersey City, New Jersey. "As oil prices rise, there is concern it could increase inflationary pressures and the Fed will raises rates. But nothing really has changed since there is an expectation that the Fed will raise rates anyway."
The Dow's financial services components eased after bond yields jumped on news of weak demand in a 30-year U.S. Treasury bond auction. The long bond dropped 1 18/32, pushing the yield up to 6.44 percent in late afternoon from Wednesday's close of 6.31 percent.
Among Dow components, American Express (AXP) slipped 1 7/8 to 154 1/2 and J.P. Morgan (JPM) eased 2-9/16 to 114.
"The concern in the market currently is interest rates, and combined with higher oil prices ahead, it's given the markets a case of jitters," said Alan Ackerman, the senior vice president and market strategist, Fahnestock and Co.
Among leading technology shares, Cisco -- the biggest maker of equipment that powers the Internet -- surged 7 1/8 to a record 135 15/16. Internet address registrar Network Solutions (NSOL) gained 36 5/16 to 292 5/16 after announcing earnings that more than doubled.
Among telecommunications issues, MCI WorldCom (WCOM), the long-distance telephone company that is set to buy smaller rival Sprint, rose 1 11/16 to 49 13/16 after its fourth quarter profits nearly tripled.
The broader Standard & Poor's 500 index ended up 5.14 points, or 0.36 percent, at 1,416.84.
Oil and energy stocks were mostly higher after gasoline futures on the New York Mercantile Exchange hit a new nine-year high.
