NEW YORK -- U.S. stocks rose, led by financial shares such as Citigroup Inc. and Fannie Mae, on optimism that Federal Reserve policy-makers will keep interest rates steady at today's meeting.
The Dow Jones industrial average rose 128.23 to 10,401.23 -- its biggest gain in a month -- after posting losses in three of the previous four sessions.
The Standard & Poor's 500 index climbed 21.79 to 1,304.60, and the Nasdaq composite index surged 59.12 to 2,795.97.
Elsewhere on the broad market, the Russell 2,000 index of small-cap stocks rose 3.08 to 426.61; the Wilshire 5,000 index jumped 189.60 to 11,892.90; the American Stock Exchange composite index advanced 3.30 to 789.83; the New York Stock Exchange composite index climbed 8.11 to 600.59; and the S&P; 400 midcap index added 6.51 to 385.54.
The Sun-Bloomberg Maryland index of the top 100 Maryland stocks gained 0.41 to 187.36.
Advancing issues outnumbered decliners by an 8-to-7 margin on the New York Stock Exchange, where about 803.4 million shares traded.
Citigroup rose $1.3125 to $44.5625; Morgan Stanley Dean Witter & Co. gained $4.875 to $93.6875; and Fannie Mae added $3.25 to $63.5625. American Express Co. climbed $6.1875 to $137.5625, contributing a quarter of the Dow average's gain.
Telecommunications companies gained after BellSouth Corp. agreed to top MCI WorldCom Inc.'s bid for Sprint Corp., boosting optimism that industry consolidation will make the shares more valuable. BellSouth fell $2.6875 to $42.6875; MCI WorldCom rose $1.125 to $71.625; and Sprint rose $3.875 to $60.875.
Nextel Communications Inc. jumped $5.125 to $75.375; VoiceStream Wireless Corp. gained $3.625 to $62.6875; and U.S. Cellular Corp. climbed $5.4375 to $73.25. Qwest Communications International Inc., an owner of fiber-optic networks, rose $2.8125 to $32.6875.
AT&T; Corp. gained $1.875 to $43.625. The No. 1 U.S. long-distance telephone company may issue several tracking stocks, the Wall Street Journal reported, quoting people familiar with the situation.
Airlines rose as the price of crude oil dropped. AMR Corp., parent of American Airlines, soared $5.1875 to $59.0625; Delta Air Lines Inc. climbed $3.0625 to $50.625; UAL Corp., parent of United Airlines, gained $2.875 to $67.125; and Continental Airlines Inc. rose $1.8125 to $34.4375.
RCN Corp. rose $7.6563 to $45.7188 after Vulcan Ventures Inc., the investment vehicle of Microsoft Corp. co-founder Paul Allen, agreed to invest $1.65 billion to help the cable television, telephone and Internet company enlarge its network.
AMFM Inc. rose $1.3125 to $65.1875 after Clear Channel Communications Inc. agreed to buy the No. 1 radio-station owner for $23.5 billion in stock and assumed debt. Clear Channel fell $3.6875 to $76.6875.
TV Guide Inc. gained $4.4063 to $45.9375. Gemstar International Group Ltd. said it would buy TV Guide for about $9.2 billion in stock and debt to improve its electronic program guides. Gemstar fell $6.625 to $77.
Mattel Inc., the most active U.S. stock, plunged $5 to $11.875 after the toy maker said it will miss analysts' earnings estimates for the third quarter, pointing to bad debt write-offs from its Learning Co. division.
Hewlett-Packard Co. fell $3.875 to $83.50 after Merrill Lynch & Co. analyst Steve Milunovich said fiscal fourth-quarter revenue growth at the world's No. 2 computer maker could be less than the company forecast Friday.
DuPont Co. gained $1.6875 to $64.6875. The largest U.S. chemical company won a legal fight over its controversial Benlate DF fungicide, as the U.S. Supreme Court rejected an appeal by nursery owners who said the company tricked them into settling claims that the chemical damaged their plants.