NEW YORK — Blue chip stocks fell for a third straight session Friday as investors fretted about rising interest rates, but technology shares continued their recovery and drove the NASDAQ composite index higher.
The Dow Jones industrial average fell 154.19 to close at 10,733.91. The blue-chip index ended the week down 110.14 points, or 1.0 percent.
The NASDAQ composite rose 86.63 to close at 3,860.66. The index, which fell steeply earlier this month, ended the week with a gain of 216.78 points, or 5.9 percent.
Broader stock indicators were mixed. The Standard & Poor's 500 fell 12.49 to 1,452.43.
The surge in technology stocks was led by a rally in semiconductor shares. Intel rose 1 1/2 to 126 13/16 a day after company executives detailed plans to begin selling an Intel-branded machine for online access later this year.
Applied Materials, a maker of equipment used in the semiconductor industry, rose 1 1/2 to 101 13/16 and PMC-Sierra jumped 9 1/4 to 191 7/8.
Internet companies like Lycos, up 5 1/4 to 46 1/2, and Yahoo, up 5 15/16 to 130 1/4, were also higher, convincing analysts that the technology sector is poised for a broad, if moderate, recovery.
"I think that aggressive investors think that the selloff has hit the bottom with technology stocks, and it is safe to stick your toe back in the water," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis.
But the gains in the high-tech sector failed to prop up the broader market, which was weighed down by fears of rising interest rates.
The Commerce Department reported Friday that Americans' incomes rose last month even faster than spending, something that hasn't happened since October.
But although people made more money, they didn't put significantly more away in savings. The report showed that the personal savings rate — savings as a percentage of after-tax income — rose only slightly to 0.4 percent in March from a record low of 0.2 percent in February.
That provided another sign that the economy continues to grow at a brisk pace, which the Federal Reserve will likely consider at its policymaking meeting on May 16. Most economists expect the Fed to raise interest rates for the sixth time since June as they attempt to keep inflationary pressures under control.
"The market has a governor on it right now . . . it's called the Fed meeting next month," said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons Inc. in St. Louis. "Until that meeting, there will be a lid on the upside of this market."
Fears of higher interest rates pushed financial services stocks down. American Express fell 5 1/2 to 149 1/2 and J.P. Morgan fell 3 to 128 3/8.
Merck fell 2 to 69 1/2 after financial news station CNBC reported that the company may face safety questions from the U.S. Food and Drug Administration about its painkiller Vioxx. The company later released a statement saying the drug is safe.
Internet-based music service MP3.com tainted the technology sector, falling 39 percent after a judge found the company liable for infringing the copyrights of the Recording Industry Association of America. MP3's products make it possible to download music over the Internet. Its shares fell 4 5/8 to 7.
Advancing issues outnumbered decliners by a 7-to-5 margin on the New York Stock Exchange and by a 12-to-7 margin on the NASDAQ.
NYSE volume totaled 1.18 billion shares, compared with 1.31 billion in the previous session.
The Russell 2000 index of smaller companies rose 11.69 to 506.25.
Overseas, Japan's Nikkei stock average fell 0.3 percent. Germany's Xetra DAX index rose 2.7 percent, Britain's FT-SE 100 rose 2.4 percent, and France's CAC-40 gained 2.8 percent.