WALL Street stocks bounced back sharply as investors quickly dismissed pangs about inflation and interest rates.

The Dow Jones industrial average rose 50.97 points to close at 7,136.62, led by a big gain from IBM. Earlier in the afternoon, the Dow was up nearly 130 points, nearly erasing Wednesday's 140 point plunge.

Broader stock indicators also pulled back before the close, but ended with sizeable gains. Stocks had opened lower, threatening to extend Wednesday's sell off, amid pressure from the bond market, where long term interest rates nearly pushed back above 7 per cent before retreating.

Advancing issues out numbered decliners by a nine to seven margin on the New York Stock Exchange, with 1,438 up, 1,105 down and 804 unchanged.

NYSE volume totalled 534.11 million shares, against 497.57 million in the previous session. The Standard and Poor's 500 stock list rose 4.66 to 820.28.