TECH STOCK DEMAND RETURNS; RECENT SELL-OFF FAILS TO DISCOURAGE INVESTORS AS THEY GRAB ISSUES IN DOWN MARKET.

Byline: Sharon King The New York Times

If the market is lower, it must be a buying opportunity.

Investors followed that mantra with a vengeance once again Friday, scooping up technology shares and other issues that were battered in a sell-off Thursday that had pushed most major stock market indexes down more than 1 percent.

As stocks zoomed, buyers at least temporarily disregarded concerns about the outlook for corporate earnings, highlighted by a double dose of profit warnings from technology bellwethers Intel and Motorola, as well as anxieties about the impact of Asia's financial crisis on American multinational companies.

But news late Friday from Compaq Computer that excess inventory and price cuts will cause first-quarter profits to fall below expectations was a reminder that stumbling blocks loom in the path of the market's climb. Compaq's announcement came after the market had closed. Its shares closed at 27-5/8, up -1/2.

While trading was in session, investors took all news as good news. They viewed a February decline in the unemployment rate to match its lowest level in 24 years as a sign that the domestic economy is motoring along at a healthy pace, which could offset the impacts of Asia's slump, said Robert Froehlich, chief investment strategist at Zurich Kemper Investments.

``In the corporate-earnings picture, there's a big question mark about what's going to happen in Asia,'' Froehlich said. ``So the driver of the profit engine is going to be the United States.

``The stock market knows the only way companies are going to be profitable is if the domestic economy is strong. And for the economy to be strong, consumers must be strong and buying. And they can't stay strong unless they have a job. Forget everything else. If they don't have a job, they can't drive anything.''

U.S. stock markets also gained from strong showings overseas, where most markets in Europe and Asia finished higher.

The buying spree erased much of the losses suffered Thursday and pushed the Standard & Poor's 500 stock index up 20.65 points, or 2 percent, to 1,055.69, a record. While none of the other major market indexes pushed further into record territory, the Dow Jones industrial average surged 125.06 points, or 1.5 percent, to 8,569.39. The Dow average stands just 15.44 points away from its closing high of 8,584.83, reached Tuesday.

On the New York Stock Exchange, more than 665 million shares traded hands, the highest daily volume since Feb. 5.

Despite its 2.43 percent climb, the technology-laden Nasdaq composite failed to recoup all of Thursday's 2.72 percent loss. It closed at 1,753.49, up 41.57 points.

The demand for stocks, especially technology shares, indicated investor unwillingness to miss a chance to participate in another leg of the market rally, said Michael Clark, head of U.S. equity trading at Credit Suisse First Boston.

Intel shares sank almost 13 percent Thursday after the company said product demand was sluggish. But after further reflection, investors decided the shares were cheap and rushed in to buy, Clark said.

Investors viewed the announcements by Intel and Motorola as indications of temporary problems and not as signals of fundamental weakness in their sectors, said Jack Geraghty, Credit Suisse First Boston's semiconductor analyst.

``It appears that some of the companies have inventory problems,'' Geraghty said. ``If there were something wrong with demand, Dell would not be having a good quarter.''

In addition to technology shares, airline stocks also benefited from the change in investor sentiment.

The stocks were helped along by the overall rally in the market and by a sharp drop in crude-oil prices, said Samuel Buttrick, an airline analyst at PaineWebber. Crude-oil contracts fell 42 cents a barrel to $14.91, the first fall below $15 in four years.

``On a day when the market is up and oil prices are down, I'd be surprised if airline stocks were not leading the charge,'' Buttrick said.

The Amex airline-sector index was one of the best-performing indexes Friday, up 3.97 percent. So far this year it is up 13.91 percent.