U.S. stocks rallied yesterday as investors scooped up shares of big technology companies, including Cisco Systems Inc., Intel Corp. and Oracle Corp.
A late surge sent the Nasdaq 6.56 percent higher, wiping out almost two-thirds of Friday's plunge, which ended the worst week in the index's 29-year history.
"Investor sentiment has moved toward quality growth companies," said Arnie Holzer, an equity strategist at Scudder Kemper Investments Inc., which oversees $290 billion. "There are a lot of very good stocks that have now reached levels where they're attractive."
The Nasdaq soared 217.87 to 3539.16, after falling as much as 2.8 percent earlier. The only bigger percentage gain in Nasdaq history came Oct. 21, 1987, two days after the stock-market crash. Yesterday's point gain was the largest ever, after the index had its largest point loss Friday.
The Dow Jones industrial average rose 276.74, or 2.69 percent, to 10,582.51, as Hewlett-Packard Co. and International Business Machines Corp. climbed. The Standard & Poor's 500 index advanced 44.88, or 3.31 percent, to 1401.44.
Although the indexes were up, almost three stocks fell for every two that rose on the New York Stock Exchange. About 1.2 billion shares changed hands on the Big Board. Almost 2.2 billion shares changed hands on the Nasdaq stock market, the fourth-most ever.
Elsewhere on the broad market, the Russell 2000 index, a benchmark of small-cap stocks, rose 5.54 to 459.26; the Wilshire 5000 index jumped 374.44 to 12,849.58; the New York Stock Exchange composite index climbed 8.72 to 620.21; and the S&P; 400 midcap index leapt 15.72 to 446.66.
Running against the trend, the American Stock Exchange composite index lost 9.00 to 848.97.
Also off was the Sun-Bloomberg Maryland index of the top 100 Maryland stocks, which fell 2.83 to 208.07, led by Human Genome Sciences Inc., off $7.6094 to $55.2656, and Aether Systems Inc, down $4.4844 to $71.25.
Among computer stocks attracting buyers, Cisco rose $9.50 to $66.50; its price-earnings ratio fell to 110 Friday from 155 a week earlier.
Intel climbed $12.50 to $123, after its multiple fell to 47 from 60. The world's largest computer-chip maker is expected to report a 21 percent jump in profit tomorrow.
Oracle gained $12.3125 to $74.8125 after its P/E ratio dropped 31 percent last week. IBM rose $6.875 to $111.875, after falling 15 percent last week. Hewlett-Packard, down 22 percent last week, gained $10.75 to $133.75.
Compaq Computer Corp. rose $2.0625 to $26.5625, while Micron Technology Inc. jumped $16.9375 to $113 after the company told analysts at a meeting that demand for personal-computer memory semiconductors is picking up.
Exodus Communications Inc. rose $18.9375 to $104.50 after the Internet network manager said it's working with Microsoft Corp. to help customers more quickly begin their online businesses.
Two Wall Street strategists -- Thomas Galvin at Donaldson, Lufkin & Jenrette Inc. and Thomas McManus at Banc of America LLC -- said investors should increase the percentage of U.S. stocks in their portfolios because many are cheap after Friday's declines.
Goldman, Sachs & Co.'s chief investment strategist, Abby Joseph Cohen, repeated her year-end forecast for the S&P; 500, which is about a 15 percent gain from Friday's close. The slide in U.S. stocks "appears to be driven by market factors rather than changing fundamentals," she said in a note to clients.
The Nasdaq fell 25 percent last week, the biggest weekly loss in its history. The S&P; 500 lost 10.5 percent, and the Dow slid 7.3 percent. For the year, the Nasdaq is down 13 percent, the S&P; 500 is down 4.6 percent, and the Dow has dropped 8 percent.
Some investors were unwilling to wager any more funds until they are confident that the rout has run its course, and traders and strategists warned any rally yesterday may be short-lived.
"There was major damage last week, and people's confidence was shaken -- we're not just going to bounce right back to where we were," said Peter Boockvar, an equity strategist at Miller Tabak & Co.
Among companies reporting higher-than-expected earnings, Ford Motor Co. rose $4.8125 to $57.0625, and Eli Lilly & Co., maker of the top-selling antidepressant, Prozac, rose $2.5625 to $70. While those companies saw their share price rise as their profits did, investors punished some unprofitable Internet companies.
Agile Software Corp., whose shares dropped 62 percent last week, fell another $5.8125 to $20.6875 yesterday. 724 Solutions Inc., a Canadian Internet-banking software maker, fell 54 percent last week and $9.875 to $45.25 yesterday.
Procter & Gamble Co. rose $6.125 to $69.125 after getting U.S. Food and Drug Administration approval with Aventis SA for a bone-building drug that will compete with Merck & Co.'s Fosamax.
Johnson & Johnson rose $4.4375 to $77.75 after Barron's reported its shares could rise to 100 in a year as it cuts costs and sees margins rise. The maker of Tylenol and Band-Aids has fallen 17 percent this year.