BLUE chip issues turned higher, but technology and smaller company shares slid on Wall Street as interest rates crept towards 7 per cent in the bond market amid worries that the Federal Reserve will hike its lending rates to contain inflation.

The Dow Jones industrial average recovered from an 81 point deficit to gain 20.02 to 6955.48 at the close. Broader measures also rebounded from the day's lows, but there were still sizeable losses in the Nasdaq market and other sectors dominated by technology and smaller company shares.

The Nasdaq composite index fell 13.54 to 1,279.43, having recovered from a 26 point plunge. The American Stock Exchange composite index, which also has a large constituency of technology issues and smaller companies, fell 4.23 to 596.24.