Technology Stocks Lead Gains

Stocks climbed sharply Monday as investors betting on better economic times ahead ignored the tumbling dollar and snapped up shares of Cisco Systems and other technology companies.

The rally pulled the tech-laden Nasdaq composite index to its highest level in about 11 months and hoisted the Standard & Poor’s 500 index to its highest close since August.

“The overall tone has certainly improved for the market,” Eric Wiegand of Credit Suisse Private Client Group told Bloomberg News.

The Nasdaq composite climbed 21.25 points, or 1.4%, to 1,541.40, its highest close since June 18. The Dow Jones industrial average gained 122.13 points, or 1.4%, to 8,726.73, and the S&P; 500 gained 11.70 points, or 1.3%, to 945.11.

Winners outnumbered losers by more than 2 to 1 on the New York Stock Exchange and by 5 to 3 on Nasdaq. Trading was active.

With major indexes coming off their fourth winning week in a row, investors may be fearful of missing out on a rally that has driven the benchmark S&P; 500 up 18% since mid-March, analysts said. But some Wall Street experts cautioned that the market might soon run out of steam.

Traders also said short-covering was fueling some of the market’s gains. As the market climbs, short sellers -- investors who sell borrowed stock, hoping to buy it later at lower prices -- are forced to buy back shares to close out their bets and stem losses.

As the flow of first-quarter corporate earnings reports thins to a trickle, investors are turning their focus to the health of the world’s largest economy. On Monday, the Federal Reserve Bank of Kansas City said its monthly manufacturing index rose to 15 in April from 11 in March. Still ahead this week are reports on retail sales, industrial production and inflation.

Treasury yields continued to fall as investors speculated that low inflation will spur the Federal Reserve to cut interest rates. The yield on the benchmark 10-year Treasury note slipped to 3.64% from Friday’s close of 3.68%.

Traders shrugged off the dollar’s continued struggles against key rival currencies. The greenback’s latest dive against the euro was triggered by U.S. Treasury Secretary John W. Snow’s comments over the weekend that a weak dollar is helping the nation’s exports, suggesting the Bush administration is in no hurry to prop up the sagging currency.

In commodity trading, oil prices fell for the first time in four sessions as traders took profits. Crude oil for June delivery fell 37 cents to $27.35 a barrel in New York Mercantile Exchange trading.

In other highlights:

* Cisco rose 72 cents to $16.67 after Lehman Bros. raised its rating on the stock to “overweight” from “equal weight.” The Amex networking index rallied 3.5% as Cisco rivals such as Juniper Networks, up 53 cents to $12.53, also gained.

* SBC Communications gained 97 cents to $24.64. Rivals such as AT&T; may have to pay SBC twice as much to use its phone lines after a regulatory ruling Friday. AT&T; fell 4 cents to $16.47.

Shares of other local phone companies rose along with SBC. The S&P; 500 telecom services index, which includes 12 of the biggest U.S. phone companies, gained 2.1%. Verizon Communications, the top U.S. local carrier, added 44 cents to $37.50, while BellSouth, the third largest, climbed 30 cents to $26.53.

* Sun Microsystems, Nasdaq’s most actively traded stock, jumped 34 cents, or 8.8%, to $4.21. Analysts cited persistent rumors of a possible takeover as part of the reason behind the sharp move.

* Among Dow issues, Altria Group gained $1.40 to $33.10. A report in this week’s Barron’s said Altria’s stock price could surge more than 26% by year’s end if it gets favorable legal decisions, resumes its stock buyback program and demonstrates the viability of the domestic tobacco industry.

* John Hancock Financial Services advanced $1.02 to $27.96. Shares of the fourth-largest U.S. life insurer are inexpensive after declining 8% in the last three weeks, UBS Warburg analyst Andrew Kligerman wrote in a note to clients.

* H&R; Block climbed $1.55 to $38.58. Goldman, Sachs & Co. analyst Michael Hodes said H&R; Block’s stock price was reasonable after its 16% decline since April 2. He raised his rat- ing on the biggest U.S. tax preparer to “in-line” from “underperform.”

Market Roundup, C10-11