Stocks scrambled higher yesterday, erasing steep losses in a late rally, as investors brushed off data painting a grim picture of the nation's economy and set their sights on a rebound by next year.

"Investors are buying for next year's earnings because we know there's going to be a turnaround," said Mr Brian Finnerty, co-head of capital markets at C.E. Unterberg Towbin. Stocks had tumbled earlier after dour economic reports of rising jobless claims, slumping orders for long-lasting manufacturing goods and a big drop in existing home sales. But investors snapped up battered stocks on mounting hopes President George W. Bush's push for more tax cuts and the Federal Reserve's nine interest rate cuts so far this year will resuscitate the economy by 2002.

The blue-chip Dow Jones Industrial average climbed 117.28 points, or 1.25 per cent, to 9,462.90, hitting its highest close since September 10th, the day before the attack on New York and Washington.