Updated from 4:03 p.m. EST

Stocks ended with big gains Friday, thanks to broad-based strength spurred by solid economic data and promising news from the semiconductor sector.

The

Dow Jones Industrial Average ended higher by 262.73 points, or 2.6%, to 10,368.86, and the

Nasdaq climbed 71.26 points, or 4.1%, to 1802.75. The

S&P 500 added 25.05 points, or 2.3%, at 1131.78.

While corporate news helped send the major averages higher, investors were also cheering economic reports on the last trading day of the week. The Institute for Supply Management, formerly known as the National Association of Purchasing Management, said its latest survey indicated that economic activity in the manufacturing sector expanded in February after 18 months of contraction.

According to the ISM, the

purchasing managers' index rose to 54.7 in February from 49.9 in January. The report is the latest in a series of data pointing to a recovery in the manufacturing sector.

Separately, the Commerce Department said

personal income rose 0.4% in January, ahead of the consensus estimate of a 0.1% increase. Spending also came in higher than expected, rising 0.4%. Also, the University ofMichigan's final

consumer sentimentindex for February showed a reading of 90.7, just slightly below the preliminary level of 90.9.

Semiconductor shares received a boost after chip-equipment maker

Novellus

(NVLS)

raised its first-quarter earnings outlook and said it views the December quarter as a bottom for its business. The company also said it could return to profitability in the second quarter, three months ahead of schedule. Analysts are currently expecting a second-quarter loss of 4 cents a share. Following the announcement, Robertson Stephens upgraded the stock to buy from market perform. Novellus climbed 14% to $48.56. The Philadelphia Stock Exchange Semiconductor Index was up 11%.

Chartered Semiconductor Manufacturing

( CHRT) rose almost 13% after the company raised its first-quarter outlook and pointed toward a rebound in the chip industry. The company said after the close Thursday that its first-quarter loss would come in at the high end of expectations at 98 cents a share, and that revenue for the quarter would rise sequentially.

Intel

(INTC) - Get Report

and

Micron

(MU) - Get Report

benefited from the positive news, trading up 8.5% and 12.9%, respectively.

Shares of

Knight Trading

(NITE)

tanked after rumors circulated that the FBI had raided the company's offices. The shares went from $8 to about $6.80 just after 1 p.m. EST. Knight emphatically denied the rumors. A spokeswoman said: "The FBI rumors are false; there is no criminal investigation going on by the FBI or SEC." Despite the denial, the shares ended down 13.9% to $6.85.

AT&T Wireless

( AWE) was down 14.8%to $8.60 after the company revised its 2002 outlook to account for the recently completed acquisition of

TeleCorp

.

As a result of pricing pressure and the troubled economy, AT&T Wireless expects to report services revenue percentage growth, without TeleCorp, in the low double digits for 2002, which is slightly below previous guidance. But including TeleCorp, AT&T Wireless expects "mid-teens percentage growth" for services revenue. Additionally, AT&T Wireless expects its 2001 year-end subscriber base of 18 million to grow by around 20% this year, but the company set plans to cut capital spending, possibly by around $200 million.

Elsewhere in the telecom sector,

Sprint

( FON) announced that it will

cut capital spending and outlined a number of steps to address liquidity concerns and increase its financial flexibility. The company signed a letter of commitment with Citibank and Deutsche Bank for a $1 billion term loan facility. Under the terms of the agreement, the assets of Sprint's directory publishing business will secure the nine-month loan. Shares of Sprint traded higher by 6.1%, while

Sprint PCS

(PCS)

was off 4.5%.

In the biotech sector, generic drugmaker

Andrx

( ADRX) saw its shares rise 25.3% to $41.91 after winning a patent infringement decision in a case against

GlaxoSmithKline

(GSK) - Get Report

.

Going in the opposite direction was biotech research firm

Invitrogen

( IVGN), which was under heavy pressure after warning that first-quarter revenue and earnings will fall short of consensus estimates. The company cited unfavorable currency exchange rates and weakness in several of its businesses as the leading causes. The stock dropped 25.2% to $34.12.

PerkinElmer

(PKI) - Get Report

fell 31.5% to $15.75 after lowering its first-quarter guidance and setting plans to cut 500 jobs in an attempt to offset lower volume in the telecom, semiconductor and photography industries. As a result of the layoffs, the maker of scientific and technical instruments will take a restructuring charge of $10 million to $15 million. The company said it expects to earn 15 cents to 17 cents a share in the first quarter and $1.05 to $1.10 a share in 2002. Analysts were expecting a net profit of 23 cents for the quarter and $1.24 for the year.

U.S. Treasury issues were lower in afternoon trading. Around 4 p.m. EST, the 10-year note was losing 27/32 to 99 5/32, yielding 4.98%.

Overseas, stocks were mostly higher, with London's FTSE 100 gaining 1.3% to 5169 and Germany's Xetra DAX up 1.2% at 5097. Japan's Nikkei 225 climbed 2.1% to 10,812, while Hong Kong's Hang Seng fell 0.6% to close at 10,425.