Bank technology stocks were down last week as investors migrated to larger companies reporting strong earnings.

In general, technology companies have "done well" in the market, said Steven Shook, analyst at Interstate-Johnson Lane, Charlotte, N.C., "but there is a lot of distortion out there."

Led by Sun Microsystems Inc. and Microsoft Corp., which reported stronger-than-expected quarterly earnings, the Nasdaq Composite index rose 17 points last week, to close at 1,349.06.

Goldman, Sachs & Co.'s composite index of U.S.-traded stocks, which also lists many bank technology firms, was up 2.46 points, to close at 125.72.

The Dow Jones industrial average continued its march toward the 7,000 milestone, despite an inflation warning from Federal Reserve Governor Laurence Meyer. The blue chip measure climbed more than 118 points, to close at 6,883.10.

In news affecting banks, Broadway & Seymour Inc. said it is nearing a break-even point in its reorganization plan.

"Based on the facts and circumstances known at this time, we expect profitable operations with continually improving quarterly progress," starting with the 1997 first quarter, said Alan C. Stanford, chairman and chief executive officer of the Charlotte, N.C.-based software and services company.

Ibes International's calculation of Wall Street analysts' consensus projected that the company would report a loss of only about a penny per share for the 1996 fourth quarter.

"It's good to see the company hit any expectations," Mr. Shook said. Management has to "build up the business with their major clients on the systems integration side."

For the nine months ended Sept. 30, Broadway & Seymour had lost almost $3.4 million on revenues of $67.8 million. Its stock price gained 87.5 cents for the week and closed at $11.50.

In other news, Transaction Network Services Inc., which sells telecommunication services to transaction processing firms, said its fourth-quarter earnings would be lower than expected.

Its stock took a nose dive because of lower-than-expected transaction volumes during the holiday season. Also, several contracts were renegotiated with customers, reducing transaction-related revenues.

"We had expected that several of our larger customers would exceed minimum volume commitments," said president and chief executive officer John J. McDonnell Jr., but they "unfortunately didn't."

The Reston, Va., company's stock price dropped $2.50 last week, closing Friday at $11.25.

In addition, Diebold Inc., a Canton, Ohio, automated teller machine maker, said it had earned more than $28 million, or 62 cents per share, on revenues of $294 million in its fourth quarter.

Its earnings per share exceeded Wall Street's expectations by a penny, according to a consensus estimate published by First Call.

However, the company's stock price lost $3.625 for the week, to close at $59.50.

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