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BLUE CHIPS RALLY IN AFTERNOON TRADING

Blue-chip stocks rallied hard in the afternoon to match strong gains in technology shares on news announced this morning that IBM would do a two-for-one stock split.

At 3 p.m., the Dow Jones industrial average was up 92.94 at 9,296.26, having bailed out of a loss of nearly 15 points earlier.

The technology-heavy Nasdaq composite index was up 44.02 at 2413.33, while the Standard & Poor's 500 index gained 12.99 to 1246.97.

Despite the Dow's gains, declining issues led advancers by 1,483-1,431 on the New York Stock Exchange. Volume was moderate at 558 million shares, although that was up from Monday's pace.

The Dow was led higher by IBM, whose shares were up 3 9/1 6 at 185 9/1 6 after the company confirmed Monday's rumors that it would split its stock two for one. IBM was joined by McDonald's, which also announced a two-for-one split and raised its dividend. McDonald's shares were up 2 3/8 at 78 1/4 .

Microsoft shares were up 8 1 5/1 6 at 170 1 3/1 6 after that company declared a stock split on Monday.

Larry Wachtel, Prudential Securities' market strategist, said the split announcements were driving the market higher, even though stock splits don't always result in higher stock prices.

While stock splits have no effect on a corporation's profits or losses, reducing the share price makes a stock more affordable.

"Psychologically, a stock split is a positive," said James Poyner, an analyst at CIBC Oppenheimer & Co. "It'll make it a little easier for smaller investors to get a few shares."

Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons Inc. in St. Louis, said the market was trading on a name-by-name basis. He was giving a slight edge to sectors that he believes will be able to post better earnings this year, including health care, financial service, technology and energy companies.

But Goldman said it will be increasingly difficult this year to find patterns. "I think it's going to be an eclectic market," he said. "Consumer nondurables should be going up, but cyclicals will go up as well."

Compaq was up 2 5/1 6 at 49 on the Big Board, after the computer maker said it plans to spin off its AltaVista Internet search service into a separate, publicly traded company, in an effort to tap into the phenomenal valuations currently being bestowed upon Internet companies.

Compaq President and Chief Executive Eckhard Pfeiffer said the public offering will allow Compaq to "unlock the tremendous value of AltaVista for our shareholders."

Dow component Coca-Cola was down 1 1/2 at 61 7/1 6. The beverage giant's fourth-quarter profits matched analysts' forecasts, but the year-over-year comparison suffered from economic slowdowns in key markets.

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