AP Business WriterNEW YORK (AP) -- Wall Street's appetite for blue chips returned Wednesday, propelling the Dow Jones industrials sharply higher on new economic data showing business is improving.

The tech sector stalled, however, reflecting lingering concerns that the sector has become overpriced.

By midafternoon, the Dow was up 82.69, or 0.8 percent, at 10,516.10, rebounding from a 153-point loss the previous session. The Dow rose a total of 480 points on Friday and Monday.

Broader stock indicators were mixed. The technology-focused Nasdaq composite index was down 3.48, or 0.2 percent, at 1,862.81. The Standard & Poor's 500 index advanced 8.07, or 0.7 percent, to 1,154.21.

"Investors are leaning towards the more industrial side of the spectrum," said Charles G. Crane, strategist for Victory SBSF Capital Managment. "These are also the companies whose business benefits the most when the economy revives and are more reasonably valued today than the technology companies."

Indeed, blue chips got a lift from manufacturing stalwarts including 3M, up 90 cents at $121.05, and General Motors, up $1.31 at $59.92.

Financial and pharmaceutical stocks also fared well. J.P. Morgan gained $1.04 to $33.55, while Merck advanced $1.32 to $62.78.

The gains were also helped by two more positive economic reports. First, the Commerce Department reported that orders to U.S. factories rose by 1.6 percent in January, lifted by stronger demand for cars, computers and machinery. Then, the Federal Reserve, in a nationwide survey of business activity around the country, suggested that signs of a recovery were becoming more widespread in January and early February.

However, the good news failed to boost tech stocks, which fell back after a modest gain Tuesday.

Cisco was off 26 cents at $16.25, while Intel lost 21 cents to $32.49, after Tuesday's runup on speculation the chipmaker's profits would rise in an improving economy.

Telecommunications stocks fared better, helped by Sprint's affirmation that its wireless and phone service units would meet their 2002 goals. Sprint's wireless PCS group advanced $1.56 to $11.14, while the long-distance phone service FON group rose $1.13 to $15.69.

And Compaq rose 37 cents to $10.95 after an influential proxy research firm recommended that Hewlett-Packard investors approve a proposed $22 billion acquisition of Compaq. HP fell 41 cents to $20.19.

The focus on blue chips was reminiscent of recent rallies in which blue chips have led the market higher. Strong gains in the sector sent the Dow on Friday and Monday to its best two-day performance since December 2000.

Tech stocks have been more sluggish. The Nasdaq remains below where it started 2002; by contrast the Dow has risen about 5 percent.

Analysts say Wall Street's mood is gradually improving, but buyers, after two down years, are extremely cautious. Amid all the excitement about the market's recent gains, there are persistent fears that stock prices -- particularly in the beleaguered tech sector -- have become too high given what will likely be relatively mediocre profits this year.

"We're going to need to see some upwards earnings revisions by companies for the rally to continue. I'd expect things to settle down over the next few weeks until we see if earnings are going to be there," said Robert Harrington, head of listed block trading at UBS Warburg. "If they're not, stocks will probably come off a little."

Still, the market's increasingly bullish tone should help stocks hold steady and possibly rise modestly, as long as there aren't any surprises such as more terror attacks.

Advancing issues led decliners 5 to 4 on the New York Stock Exchange. Volume came to 966.13 million shares, compared with 1.01 billion at the same point Tuesday.

The Russell 2000 index rose 3.00 to 490.59.

Overseas, Japan's Nikkei stock average advanced almost 1.0 percent. In Europe, Germany's DAX index rose 1.1 percent, Britain's FT-SE 100 climbed 0.6 percent, and France's CAC-40 gained nearly 0.2 percent.

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