US stocks close higher on rebound

Technology and blue chip stocks snapped back as bargain hunters capitalised on the wreckage left after Wall Street's worst day this year.

But analysts cautioned against reading too much into the advance, which came primarily on heavy trading late in the session.

Although the Nasdaq composite index closed above the 2,000 benchmark, recovering from Monday's sell-off, it remains near its lowest level in two years.

Meanwhile, the Dow Jones industrials' gains barely cut into its 436-point loss in the previous session.

"The rebound we saw was very positive, but this isn't over," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray. "We're going to be back and forth here for a while."

The Nasdaq closed up 91.42 at 2,014.80, a 6.5% gain, taking back much of Monday's 129-point loss.

The Dow rose 82.55 to 10,290.80, or less than 1%, in choppy trading. The Standard & Poor's 500 index rose 1.50%, gaining 17.50 to 1,197.66, but is still in bear market territory at more than 20% off its high.

The rebound's staying power was questioned, though, by market watchers who contend the outlook for company profits remains dismal and investor sentiment is still fragile.

Still, there were some signs that, at least for the moment, stocks and stock prices might be stabilising.

News that Motorola was cutting 7,000 positions, in addition to 9,000 previously announced company-wide cuts, upset few on Wall Street. The world's second-largest cellphone manufacturer, which blamed soft market conditions, rose 24 cents to $15.20.