Updated from 4:04 p.m. EST

Stocks closed with solid gains Monday, despite a weaker-than-expected reading on the manufacturing sector and a slowdown in the pace of consumer spending. A bullish forecast for 2004 semiconductor sales helped keep buyers in charge.

The Dow rose 94.22 points, or 0.89%, to close at 10,678.14; the S&P 500 gained 11.03 points, or 1%, to 1,155.97, about 2 points below its recent 23-month high; and the Nasdaq led gains following a six-week losing streak. It added 27.98 points, or 1.38%, to finish at 2057.80, its best one-day point gain since Feb. 6.

Volume on the New York Stock Exchange approached 1.5 billion shares, with advancers beating out decliners by 7 to 2. Some 1.7 billion shares changed hands on the Nasdaq, where advancers topped decliners by 2 to 1.

Sean Martin, the head trader at A. Gary Shilling, acknowledged that economic news was weaker than expected, but he noted that the employment component of a report from the Institute for Supply Management was particularly strong. "That's something the market is really waiting to see," he said. "Employment was much stronger this month, and that's a good sign."

In one of the market's marquee economic readings, the ISM said its purchasing managers index fell slightly to 61.4 in February from 63.6 in January. While anything greater than 50 implies growth, the slip was slightly worse than economists expected. The index's gauge of new orders slid to 66.4 from 71.1.

However, the employment index of the PMI shot up to 56.3, the highest level since December 1987, from 52.9. February marked the fourth straight month that the manufacturing sector has seen an improvement in hiring activity. Investors are hoping that foreshadows a positive reading from the eagerly awaited employment report due out Friday from the government.

"I think we know the economy is strong," added Martin. "The market is just waiting for Friday's report. They've been disappointed time and time again on this, and it's really the last shoe that needs to drop here. I think it makes sense that this month's number could be a real whopper, and people are starting to anticipate that."

Economists expect the report to show that the economy added 135,000 new jobs in February, after a 112,000 gain the previous month.

"Friday's employment numbers are huge," said Bryan Piskorowski, a market analyst at Wachovia Securities. "This whole jobless recovery thing is a big center point for the markets in trying to judge how consumers are going to really be acting for the rest of this year."

In other markets, the 10-year Treasury note was down 4/32, yielding 3.99%, while crude oil and gold futures prices climbed.

Only two of the 30 Dow stocks were lower, with Coca-Cola ( KO) shares closing down 32 cents to $49.64 following reports that the federal government is looking at its dealings with a Japanese company in its investigation of whether Coke inflated earnings in the 1990s. Also, Johnson & Johnson ( JNJ) was down 15 cents to $53.76.

Alcoa ( AA) led the rally, up 2.48%. Other winners included Eastman Kodak ( EK), up 1.72%; and AT&T ( T), up 1.7%.

J.P. Morgan cut Intel ( INTC) to neutral earlier, but the chip giant's stock rose recently by 49 cents to $26.96.

J.P. Morgan also downgraded Intel rival Advanced Micro Devices ( AMD) to underweight from neutral, citing concerns over flash memory pricing. The company's shares were recently trading down 11 cents to $14.89.

Wal-Mart ( WMT) acquired Bompreco, a retail chain in Brazil, from Dutch supermarket giant Ahold ( AHO) for $300 million. The acquisition gives Wal-Mart its first stores in the northeastern Brazil market. The company's shares were recently up 89 cents to $60.45.

Tech stocks were powered by semiconductors after chip investors were heartened by an industry group prediction that global semiconductor sales will rise more than 19% this year, despite a decrease in January. The Semiconductor Industry Association cited "broad-based strength in all major end-markets, especially computation, communications, global consumer and automotive."

Overseas, London's FTSE closed up 1% to 4537, and Germany's Xetra DAX finished up 0.9% to 4054. In Asia, Japan's Nikkei closed up 2.1% to 11,271, and the Hang Seng in Hong Kong stayed flat at 13,919.

In currency trading, the yen traded close to a three-month low against the dollar in New York after Japan's vice finance minister suggested he wants a weaker currency. The dollar was recently buying 109.01 yen. The euro rose to $1.2444 on expectations the European Central Bank will not cut its benchmark interest rate at a Thursday meeting, even though recent data showed tame inflation.

Meanwhile, the Commerce Department said personal income grew 0.2% in January, matching December's gain, which was revised down from 0.3%. Economists had predicted a rise of 0.5%. Meanwhile, personal spending was higher than expected, growing 0.4%. December's gain was revised lower to 0.4%, from 0.5%. Economists were predicting a reading of 0.3% for January.

Finally, construction spending fell 0.3% in January. Economists expected a 0.3% gain.

On Tuesday, reports on February auto sales are due from major American automakers. Meanwhile, Cablevision ( CVC) is expected to report a fourth-quarter loss of 45 cents a share compared to last year's 40 cents a share, according to Thomson One Analytics, while B.J.'s Wholesale Club ( BJ) is expected to announce fourth-quarter earnings at 65 cents a share, compared to last year's 70 cents a share.

Last week, the Nasdaq fell for the sixth straight week, adding to speculation that the tech sector could be experiencing a correction after a year of sharp gains. On Friday, the Dow closed up 3.78 points, or 0.04%, to 10,583.92; the S&P 500 finished up 0.03 points at 1144.94; and the Nasdaq lost 2.75 points, or 0.14%, to 2029.82. The Dow lost ground for the second week in a row, while the S&P gained a fraction.