Technology stocks led a strong rally yesterday, as investors hoped two pieces of good news would add substance to recent guarded optimism: deep interest rate cuts by the Federal Reserve and a positive surprise from tech giant Cisco Systems.

"You have a bit of a confluence of potentially positive events," said Mr Rick Meckler, president of investment firm LibertyView, which oversees $1 billion, referring to the Fed meeting and Cisco's results. "The market has decided the Fed is on its side, and I think every step they take, the ultimate spin has always been positive."

Cisco, due to report its results after the close, is expected to say sales are about to recover, a sign the battered tech sector has hit bottom, analysts said. Cisco rose 64 cents, or 3.7 per cent, to $17.90.

Data-storage company EMC was the most active on the New York Stock Exchange, posting a big gain as bargain hunters bet the company is in a position to return to growth when the economy recovers, analysts said. EMC jumped nearly 11 per cent, or $1.41, to $14.50, the highest close in two months.