The Nasdaq stock index posted its highest-ever one-day percentage gain Tuesday, jumping 10.5 per cent or 274.05 points, and taking several leading high-tech stocks along for the ride. At the end of regular trading, the Nasdaq index sat at 2889.77, up from 2615.72 at the start of the day.
Among the big winners were eBay (up 22.24 per cent), Sun Microsystems (up 16.32 per cent), Yahoo (up 15.7 per cent ) and Cisco Systems (up 13.64 per cent).
At the other end of the scale, Tuesday's significant losers were 3Com (down 25 per cent) which issued a profit warning on Monday, Amazon.com (down 4.47 per cent) and Linux software vendor Red Hat (down 1.97 per cent), which on Monday had announced staff layoffs.
The surge in confidence appeared to stem from a speech by Federal Reserve chairman Alan Greenspan in which he said that the US economy had now slowed sufficiently to make interest rate cuts more likely than further rate hikes.
The likelihood of an end soon to uncertainty over the outcome of the US presidential election was also a positive influence on share prices, Yale Hirsch, market historian and editor/publisher of the 2001 Stock Trader's Almanac, said in a statement.
But the record gain does not mean an end to uncertainty over investment strategies. Nasdaq is still down 44 per cent from its March record high of 5132.5, and many economists regard excessive volatility in stock markets, such as those seen on Nasdaq over the past few weeks, as a likely precursor of a crash.
In after-hours trading, Apple Computer, which after the market's close Tuesday warned of a forthcoming first-quarter loss, fell 12.5 per cent to $14.87, according to Island ECN's electronic trading Web site, and is likely to be a drag on Nasdaq when trading opens there Wednesday.