Spurred on up by upbeat comments from technology industry leaders, the bulls came thundering back on Wall Street yesterday, pushing the Nasdaq composite over 2,000 for the first time since early August, and the Dow industrials back above the 10,000 mark for the first time since September 5th.

Investors also took encouragement from a key non-manufacturing index that showed unexpected growth in the service sector, helping to set investors looking towards the strength and timing of a recovery rather than on how deep the current recession might be.

The index, compiled by the National Association of Purchasing Managers, soared to 51.3 in November from 40.6 the month earlier, confounding economists' forecasts of a much smaller gain to 43 points.

Anything above 50 indicates expansion in the sector. Economists warned, however, that the index was not a 100 per cent reliable indicator of resumed growth and that it had given false starts in the past.

Homebuilder stocks also jumped, boosted by strong November home-order figures and an all-time high last week in demand for loans to purchase homes.

Oil stocks also rose after Russia announced it would cut oil exports by about 5 per cent from next year to support world crude prices. The dollar gained against other currencies as the stock market appeared to decide the economy had bottomed out.

Bonds tumbled as investors moved funds into equities as they scaled back their expectations that the Federal Reserve policy-making committee would cut rates again when it next met on December 11th.

Technology stocks led the market higher throughout a day of extremely heavy trading, with companies such as Cisco, Oracle, Apple, Sun Microsystems, IBM, Microsoft and Dell all moving sharply higher by midday on hopes that the battered sector was on the verge of recovery.

On Tuesday evening, Cisco chief executive John Chambers told analysts he was "cautiously optimistic" that the worst of the technology downturn was over and that November orders for the computer-networking equipment maker were evenly spaced and had met expectations.

Shares in Oracle soared 10 per cent after CEO Larry Ellison said Silicon Valley's largest software company could deliver "spectacular margin expansion" when the economy turned, and that in the meantime there were signs of improvement for his firm and that business had stabilised.

Computer-chip stocks kept pace with the rally, with the Philadelphia Stock Exchange semiconductor index jumping more than 6 per cent.

The new buoyancy in the technology sector raises the prospect that Intel will raise its fourth-quarter sales forecast when it briefs analysts today.

The chip-making giant has been selling more of its higher-priced Pentium 4 chips than older, less profitable Pentium III microprocessors.

At one point yesterday the Nasdaq Composite Index had climbed 43 per cent, since sinking to three-year lows on September 21st in the aftermath of the attacks on the United States.

The Dow was up some 22 per cent. Compared with a year ago, however, the Nasdaq index was down 16 per cent and the Dow 7.0 per cent.

The mood among investors could be dampened before the weekend due to new data on productivity and factory orders today, and a key government report on the US labour market tomorrow, market analysts said.

The unexpected return to growth in the services sector, which includes a range of activities from transportation to financial services, is being seen as a turning point in the post-September 11th period, when the economy had to deal with the aftershocks of the attacks on the World Trade Centre and the Pentagon.

The pace of decline in manufacturing activity also slowed in November, while consumer spending jumped in October.

Low mortgage rates have boosted house purchases, and last week saw the biggest one-week gain for three years in 30-year mortgage rates.

Sales of new, single-family homes rose 0.2 per cent to an annual rate of 880,000 units in October, from 878,000 the previous month.