The Nasdaq composite index rose 75.63, or 2 percent, to 3,862.99, and the Standard & Poor's 500 index added 16.39 to 1,479.32.
The Dow Jones industrial average climbed 99.26 to close at 10,867.01, led by Honeywell International, which gained $2.13 to $35.69.
At the end of regular trading, Intel edged up 38 cents to $62.94, while Microsoft squeaked up 88 cents to $70.
"We're carrying forward the momentum from last week," said Larry Wachtel, a market analyst at Prudential. Last week, the Nasdaq and S&P 500 each gained about 3 percent, while the Dow rose 2 percent.
In addition to two significant economic reports that are due this week--productivity and inflation at the wholesale level--investors will be paying close attention to earnings news from two tech giants.
Cisco Systems, a maker of networking equipment, announces fourth-quarter earnings tomorrow. Semiconductor equipment maker Applied Materials will release third-quarter results Wednesday.
Cisco closed up 69 cents today at $66.25, and Applied rose $2.19 to $69.94.
Other large-capitalization tech stocks gained ground. America Online rose $1.06 to $53.06, Amazon.com climbed $1.13 to $33.81, and Dell Computer gained $1.31 to $42.69.
Despite the recent improvement, some analysts expect further volatility.
"We still expect further weakness or downside tests, particularly in the technology sector, during the late summer-fall period prior to the start of a durable or major advance," Dick McCabe, chief market analyst at Merrill Lynch, wrote in a report.
McCabe said the markets need to hit bottom before posting a strong rally, but that investors still seem bullish on many tech shares.
"It seems that the willingness of investors to buy (technology IPOs) does not reflect the kind of distraught or overly pessimistic emotional condition which usually characterizes a strong bottom in the general market or in a specific sector," he said.
The CNET tech index rose 68.42 to close at 2,678.16. Winners outpaced losers, with 75 of the 97 stocks in the index rising, 21 falling and one remaining unchanged.
Almost all of the 18 sectors tracked recorded gains. Network equipment and computer memory storage makers posted the strongest gains, rising about 6 percent and 5 percent. Wireless companies were the day's largest losers, climbing 1 percent.
GRIC Communications, a provider of Internet services and software, was the biggest percentage gainer on the Nasdaq. The shares jumped $3.97, or 55 percent, to $11.13.
Microtune shares also jumped, one day after the company's initial public offering. The provider of radio-frequency tuners for cable modems and digital televisions rose $6.88, or about 23 percent, to $37.
Shares of Crossroads Systems rose $2.63, or nearly 32 percent, to $10.88 on a volume of 9.2 million shares, more than nine times the stock's average daily volume.
Among members of the CNET tech index, shares of American Power Conversion, a maker of electrical equipment for computers, gained $1.81 to $25.13.
Priceline.com shares rose $3.25, or 13 percent, to $27.50, and Inktomi gained $9.38, or 9 percent, to $111.13.
Pinnacle Holdings fell $7, or about 14 percent, to $43.13 after the provider of rental space to wireless communications companies said it plans to sell as many as 9.2 million shares to raise money for acquisitions.
The Philadelphia semiconductor index climbed 32.98, or almost 4 percent, to 954, led by chipmaker Teradyne, which gained $3.50 to close at $51.31. Texas Instruments rose $3.75 to $59.