Positive earnings news from Internet and tech companies sustained an afternoon rally in Net issues, giving the Nasdaq a major lift.
In afternoon trading, Microsoft gained strength after a weak market opening. Shares of the company rose 2.12, or 2.6 percent, to 83.12 ahead of the report. The company's earnings could help a rebound in computer technology stocks.
A narrower-than-expected second-quarter loss lifted shares of E*Trade from yesterday's tumble. The online broker posted a pro forma loss of $14.3 million, or 12 cents a share, beating the 17-cent loss projected by analysts at First Call.
E*Trade closed strong, up 21.2 percent, or 15.68 points, to 89.5 after dropping as much as 17.7 percent in yesterday's beating. The stock fell 41 percent in the past week. Ameritrade also rose, surging 26.4 percent, up 23.25 to 111.12 at the market close.
"It has always been perceived as a buying opportunity when these stocks correct," Riggs Investment Management CIO Philip Tasho said. Tasho said he expects the rebound in computer-related stocks to be short-lived, saying they're still overvalued.
Meanwhile, PC hardware stocks closed in positive territory, led by large-percentage gainer Dell Computer. PC makers Apple, Compaq, and Gateway were all up at the close. Shares of Apple rose .18 to 34.06, and Compaq shares gained 1.25 to 24. Dell jumped 2.75, or 7.7 percent, to 38.18, and Gateway gained 2 to 61.5.
Compaq is slated to release first-quarter earnings before tomorrow's market open. On April 9, the PC maker warned of a first-quarter shortfall. The company said it's expecting earnings of about 15 cents per share, less than half of the 31 cents projected by First Call financial analysts.
Bloomberg contributed to this report.