In response, investors continued to shake off the effects of the week's wild gyrations and went right back into the ring.

The bellwether Dow Jones industrial average was up 64.74 points to 5,441.62 at 2:30 p.m. The measure started off slowly but zoomed higher on the back of bonds, which cheered Greenspan's comments before Congress.

The price of the Treasury's long bond surged 1-10/32 to trim the yield to 6.91 percent. It's the first time the bond fell below the psychologically important level of 7 percent since July 3.

Greenspan said that inflation remained quiet and predicted a slowdown in economic growth that could dampen inflation pressures. But he took pains to leave his options open on raising rates if the economy started to take off unexpectedly.

The broader markets also welcomed the chairman's comments. On the New York Stock Exchange, advances led declines, 1,791-619, on volume of 362 million shares. The S&P 500 rose 7.79 points 641.86 and the American Stock Exchange gained 10.31 points to 550.32.

The Nasdaq Composite continued to recover from the pounding it took last week and Monday, adding 19.63 points to 1,106.28.

The banking sector, which is sensitive to interest rates, rallied on the news. Chase Manhattan (CMB), the largest U.S. bank, gained 2 to 69-3/4, while Citicorp (CCI) rose 3-3/8 to 82-1/8 and BankAmerica (BAC) advanced 2 to 78-7/8. J.P. Morgan (JPM) climbed 1 to 84.

Shares of carrier TWA (TWA) fell 1-1/4 to 10 on the morning after a TWA 747 crashed off the New York coast, apparently killing all 228 passengers and crew.

The disaster came just hours after the company announced Wednesday that quarterly profits rose 400 percent, with executives saying the financially strapped carrier had finally overcome years of problems.

However, the crash had only minor effects on other transportation stocks. The Dow Transports inched up 4.28 to 2,022.80, with major carriers Delta (DAL) losing 3/8 to 75 and United Airlines' parent UAL (UAL) edging up 5/16 to 49-1/8. American Airlines parent AMR (AMR) slid 5/8 to 81-1/4,

In the technology sector, Apple Computer (AAPL) rose 4 to 20-7/8 after the struggling company reported late Wednesday that it had narrowed losses in the second quarter.

Altera Semiconductor (ALTR) gained 3-3/8 to 32-5/16 despite reporting a worse-than-expected 24 percent rise in earnings. Checkmate Electronics (CMEL) rose 1 to 14-3/4 after reporting a 45 percent jump in earnings, and semiconductor equipment maker Ultratech Stepper (UTEK) added 1-1/4 to 17-1/4 on a 75 percent improvement in results.

Lucent Technology (LU) gained 2 to 37-7/8. The company reported sales of more than $5 billion for the last quarter, it's first announcement as a separate company since spinning off from AT&T last May.

Meanwhile, AT&T (T) dropped 2-3/8 to 54 after company executives warned that earnings could slip because of increased competition.