The Nasdaq composite index rose 164.41, or nearly 6 percent, to 2,917.07, and the Standard & Poor's 500 index climbed 26.31, or almost 2 percent, to 1,369.86. The Dow Jones industrial average rose 95.55 to 10,712.91.
The Nasdaq gained 10 percent from last week, while the Dow rose 3 percent, and the S&P climbed 4 percent.
"The markets are discounting the fact that we're going to get a resolution to the presidential election," said Todd Clark, head of listed trading at San Francisco-based investment bank WR Hambrecht.
Two Florida judges threw out lawsuits to disqualify thousands of absentee ballots cast in Martin and Seminole counties because of supposed irregularities in the requests for the ballots.
The development handed Republican George W. Bush twin victories in his efforts to close out the state's contested presidential election and declare victory. Democrats said they would appeal the decision.
But uncertainties remain. After the markets closed, a sharply divided Florida Supreme Court ordered manual recounts to begin. The ruling invigorates Al Gore's quest for the White House. Bush leads by only 537 votes.
But the markets did receive unequivocally positive economic news. Signs of cracks in the tight labor market gave investors more hope that the Federal Reserve Board will cut interest rates.
The nation's unemployment rate increased to 4 percent in November as job growth remained weak for a second consecutive month, the latest sign that the red-hot economy is cooling.
The CNET tech index gained 81.74 to 2,381.07. Advancers muffled decliners, with 81 of the 97 stocks in the index falling, 12 rising and four remaining unchanged.
Intel shares closed up $1.69 to $34, shrugging off a late Thursday earnings warning. The chip giant said that fourth-quarter revenue will be flat or possibly below the $8.7 billion the company reported in the third quarter.
Intel executives said that over the past three weeks they have seen "increasing negative signs" as well as larger order cancellations from a number of major customers.
As a result, Intel now expects revenue for the fourth quarter to be roughly flat with third-quarter revenue of $8.7 billion, plus or minus a few percentage points. This is lower than the previous expectation that fourth-quarter revenue would be up 4 percent to 8 percent from third-quarter revenue.
Some analysts speculated that Intel's success in the market Friday could indicate that the stock--and possibly the broader stock market--is at or near its trough and may soon rebound.
"Intel trading better after bad earnings was a real positive sign for the market," said Kathy Taylor, vice president and assistant manager of Nasdaq trading at A.G. Edwards. "Intel is a bellwether?and as goes Intel so goes sentiment."
The negative Intel news did not spook the chip sector. Of the 18 sectors tracked by CNET Investor, chip equipment makers and chipmakers posted the sharpest jumps, rising 10 percent and 9 percent, respectively. Server hardware companies were one of the day's two losers, falling 5 percent.
The Philadelphia semiconductor index rose 68.86, or 12 percent, to 638.34, led by National Semiconductor, which climbed $3.63, or 19 percent, to $22.50.
Unfavorable news also failed to make Microsoft investors nervous. Lehman Brothers on Friday cut its earnings and revenues forecasts for software giant Microsoft, marking the second time in two days that an investment firm has made such a revision. Microsoft rose $1.31 to $54.44.
In research notes, Lehman analyst Michael Stanek shaved his revenue target for fiscal year 2001 by $640 million to $25.9 billion, or 2 percent. Stanek also reduced earnings projections to $1.88 per share from $1.91.
Some market watchers believe traders might be bargain hunting for blue chip tech stocks such as Intel and Microsoft. "These are companies that have products (and) are not likely to go out of business," Taylor said. "At some point, you have to say this is a bargain."
Sun Microsystems dragged the server hardware sector down, falling $3.88, or 9 percent, to $38.94. Volume topped 114 million shares, more than four times the stock's daily average of 25.9 million shares, making it the most actively traded stock on the Nasdaq.
Quantum's Hard Disk Drive Group also warned Friday that revenue will miss previous forecasts because shortages of a specific component hurt its desktop drive business. The stock closed up 50 cents at $9.38.
Quantum expects third-quarter revenue in a range between $725 million and $750 million. The company also expects to reduce its net by more than half from the loss of 25 cents it reported in the September quarter, excluding a special charge reversal.
Some companies could not escape investor wrath. PC Connection fell $7.69, or nearly 44 percent, to $9.81. The direct marketer of personal computers said its fourth-quarter net income is expected to be 21 cents to 24 cents a share. It was expected to earn 42 cents, the average estimate of seven analysts polled by First Call/Thomson Financial.
Computer equipment distributor CDW Computer Centers also released some bad news after the markets closed. The Vernon Hills, Ill.-based company said it expects to report fourth-quarter earnings in the range of 40 cents to 42 cents a share.
Wall Street expected the company to make 50 cents a share, the consensus estimate of five analysts surveyed by First Call. Banc of America Securities cut CDW to a "buy" from a "strong buy" rating. The stock fell $9.50, or 24 percent, to $29.56.
CDW expects to post revenue of $990 million to $1.01 billion for the quarter. The company is facing "slower-than-expected demand due to economic uncertainties," CEO Michael Krasny said in a statement. "These economic uncertainties make us cautious about 2001, when we believe CDW will continue to increase market share but grow sales at lower rates than recent quarters."