US stocks end higher

NEW YORK: US stocks rose on Monday, led by a rebound in computer and semiconductor makers, as investors decided that last week's sell-off had been overdone and fears of higher interest rates had been exaggerated.

"Last week's sell-off was so fast and furious, and people have looked at some of the technology leaders that are 30-40 percent from their highs and have begun to nibble," said Thomas Galvin, chief investment officer at Donaldson, Lufkin and Jenrette.

Still, there was a lack of conviction in the rally as many investors appear confused about whether the U.S. economy is in the midst of a slowdown or is growing so fast that the Federal Reserve is likely to jack up rates further to prevent inflation from accelerating.

The schizophrenic picture was illustrated by a decline in the shares of leading retailers, including the largest, Wal-Mart Stores, and consumer products companies, like Procter & Gamble, on concerns about profit growth.

"There is no conviction," said Larry Rice, chief investment officer at Josephthal Lyon & Ross. "Is the economy slowing down or is the red-hot momentum continuing? I think people are really shell-shocked by the crazy volatility."

Based on early and unofficial closing figures, the Nasdaq composite index climbed 103.99 points, or 2.84 percent, to 3,766.99. The technology-laden index fell 179 on Friday, and lost 10.54 percent over the whole of last week.

The blue-chip Dow Jones industrial average, meanwhile, gained 10.81 points, or 0.10 percent, to 10,521.98 as gains in its technology and financial services components were largely offset by declines in the retailers and consumer products concerns.

Among the leading technology issues to gain were microchip giant Intel Corp., which added 2-3/16 to 66-3/4, and computer maker Hewlett-Packard Corp., up 2-1/8 at 109-3/16.

Data networking company Cisco Systems Inc. was one of the Nasdaq market's most heavily traded shares, gaining 2-5/8 to 65-7/16.

Leading banks and investment banks to gain included J.P. Morgan & Co. Inc., which rose 3-1/16 to 133-1/2, and Citigroup, up 2-1/4 at 70-9/16.

Drug and biotechnology companies, however, failed to get a boost. Nasdaq-listed drugmaker Cephalon Inc. dropped 22-7/16 to 40-5/16 after it said the medicine used to treat the sleeping disorder narcolepsy showed no benefit in reducing attention-deficit hyperactivity disorder in adults.

Losses in the stock of brand-name drugmakers Johnson & Johnson and Merck & Co. also kept the Dow's gains in check.

The Standard & Poor's 500 index, a broader measure of the market, ended up 10.94 points, or 0.77 percent, at 1,430.83.

In economic news, the Chicago Purchasing Manager's Index showed that regional U.S manufacturing activity continues to hum along, although less than in the past. The gauge registered 52.0 in July, down from 56.8 in June.

However, the prices-paid part of the Chicago index jumped to 70.0 in July from 63.6 in June.

On Friday, news that second-quarter U.S. gross domestic product surged a surprising 5.2 percent essentially threw into doubt an emerging consensus that the U.S. economy's blistering pace of expansion is finally easing up.

Wall Streeters said the surprisingly high number raised the odds that the inflation-fighting Fed will bump up rates to keep inflation out of the economy when it meets again on Aug. 22.

(C) Reuters Limited 2000.