Updated from 4:05 p.m. EDT

Investors went on a buying spree Monday, hoping for some solid second-quarter earnings reports.

The

Dow Jones Industrial Average

TST Recommends

finished up 146.58 points, or 1.6%, at 9216.79, while the

S&P 500

gained 18.80 points, or 1.9%, to 1004.50. The

Nasdaq

rose 57.79 points, or 3.5%, to 1721.25, eclipsing its intraday high of 1718 hit on May 21, 2002. Treasury prices were lower, with the yield on the 10-year note at 3.73%.

"Are they blowing up another bubble? Possibly," said Al Goldman, chief market strategist at A.G. Edwards. "Internals are very positive, and markets could continue moving up from here, but last time I checked, they haven't changed the rules of gravity."

On a technical note, John Bollinger, founder of BollingerBands.com, said, "Breaking the 1000 level for the S&P 500 has strong psychological significance for the market, but the key level investors should be focusing on is 1015. If it holds above that level, it will give people a great deal of confidence to come back to the market. For the Nasdaq, this has already happened at 1685, so breaking above the 1700 level today just confirms it remains the leader

among indices."

Some big Nasdaq names had a huge day in the absence of any major company-specific news.

Applied Materials

(AMAT) - Get Report

rose $1.62, or 10.1%, to $17.63;

Altera

(ALTR) - Get Report

climbed $1.72, or 10%, to $18.94;

Linear Technologies

(LLTC)

advanced $2.50, or 7.5%, to $35.64;

Ericsson

(ERICY)

gained 65 cents, or 6%, to $11.33;

RF Micro

(RFMD)

rose 34 cents, or 5.7%, to $6.23; and

Qualcomm

(QCOM) - Get Report

rose $2.44, or 6.5%, to $39.90.

Trading volume was 1.4 billion shares on the Nasdaq, where advancers outpaced decliners by a margin of 2 to 1. More than 1.8 billion shares changed hands at the

New York Stock Exchange

, with gainers ahead of decliners by a 2-to-1 margin.

Microsoft helped to boost tech shares. Its stock rose 99 cents, or 3.7%, to $27.49 amid a report that it is considering paying shareholders a special dividend of more than $10 billion, according to the

Financial Times

.

Intel

(INTC) - Get Report

shares rose $1.05, or 4.8%, to $22.77, and

Cisco

(CSCO) - Get Report

gained 68 cents, or 3.9%, to close at $18.20.

In earnings news,

BMC Software

(BMC)

said it expects fiscal first-quarter earnings and revenue to come in below its initial estimate, as key customers postponed making business-software purchases. BMC shares ended down $1.32, or 8%, at $15.15.

Schering-Plough

(SGP)

predicted second-quarter earnings will be lower than Wall Street estimates, citing the loss of Claritin prescription franchise sales after the allergy-fighting drug became available over the counter. Its shares fell 76 cents, or 4%, to $18.30.

Redback Networks

(RBAK)

, a maker of network equipment, said late Thursday it expects weak second-quarter sales because of reduced spending on telecommunications and Asia's corporate contraction. Shares dropped 44 cents, or 48%, to 47 cents.

Meanwhile,

GE

(GE) - Get Report

, which will report results on Friday, was in focus following news that the European Commission had told the company it is concerned about its planned takeover of Finnish medical-equipment maker

Instrumentarium

(INMRY)

. GE rose 75 cents, or 2.6%, to $29.30. Instrumentarium shares advanced 83 cents, or 2.2%, to $38.63.

Alcoa

(AA) - Get Report

, which will report earnings on Tuesday, climbed 35 cents, or 1.4%, to $25.65. Sector watchers were eyeing news that Canada's

Alcan

(AL) - Get Report

had made a hostile $3.88 billion bid for France's

Pechiney

(PY) - Get Report

. Shares of Alcan lost 57 cents, or 1.8%, to $30.89.

Meanwhile,

Yahoo!

(YHOO)

is due to report earnings this week. The company's profit and revenue estimates were raised Monday at J.P. Morgan amid expectations of strong advertising sales. Shares gained 52 cents, or 1.5%, to 35.22.

Smith Barney analysts lifted

Siebel's

(SEBL)

rating to in line from underperform, citing the software maker's improved risk profile. Shares rose 34 cents, or 3.5%, to $10.04.

Also on the research front, Merrill Lynch upgraded

Morgan Stanley

(MWD)

to buy from neutral. Morgan Stanley shares finished up $1.37, or 3%, at $46.17.

In merger news,

Oracle

(ORCL) - Get Report

said late Thursday it will wait until July 18 for

PeopleSoft's

(PSFT)

response to the $6.2 billion takeover bid for the software company. The deadline was initially set to expire Monday. Oracle shares moved up 39 cents, or 3.2%, to $12.57.

Apparel maker

VF

(VFC) - Get Report

agreed to acquire rival

Nautica

(NAUT)

for $586 million in cash. Nautica shares rose $3.59, or 27%, to $16.78, while VF shares climbed $1.45, or 4.3%, to $35.49.

Overseas markets ended higher, with London's FTSE 100 up 1.3% at 4074 and Germany's Xetra DAX up 3.2% at 3344. In Asia, Japan's Nikkei rose 2.6% to 9795, while Hong Kong's Hang Seng gained 2.7% to 9892.

Brent crude futures were higher. The dollar was stronger against the euro but weaker against the yen.

On Thursday, the Dow ended off 72 points at 9070, the S&P 500 lost 8 points to 985 and the Nasdaq shed 15 points to 1663.