Stocks rallied yesterday on optimism that interest rates will remain stable in the face of recent economic data suggesting the economy is slowing down.

The Dow Jones closed up 99.26, or 0.8 per cent, at 10,867.01.

Broader stock indicators were also higher. The Standard and Poor 500 was up 16.39, or 1.1 per cent, at 1,479.32, and the Nasdaq was up 75.63, or 2.0 per cent, at 3,862.99.

Advancing issues outnumbered decliners by a three-to-two margin on the New York Stock Exchange, where volume came to 850.44 million shares, well below Friday's pace.

The Russell 2000 index was up 6.00 at 509.63.

Investors are searching for clues as to whether the Federal Reserve will raise interest rates at its next meeting on August 22nd. But much of the economic data released recently has been of little help, offering conflicting figures that can be interpreted several ways.