In morning trading, the Dow Jones Industrial Average gained 103.85 to 10,383.18 while the technology-heavy Nasdaq Composite Index jumped 43.57 to 2,783.98. The Nasdaq was off 4.5 percent last week, partly a result of Microsoft president Steve Ballmer's comments that tech shares are overvalued.
"There was panic in the market last week after comments from Microsoft's president," said Joseph Stocke of Meridian Investment in Valley Forge, Pennsylvania. "The selling was overdone."
IBM and Dell Computer edged higher this morning after announcing a services partnership worth about $6 billion over seven years. IBM rose 1.31 to 126.31 while Dell climbed 1.19 to 44.88.
Intel surged 3.64 to 79.31 after the chipmaker unveiled its latest high-speed Pentium III line of microprocessors. Intel also showcased a chipset that allows personal computers using Celeron chips to be upgraded to use Pentium III chips.
Computer-related shares got a boost from Abby Joseph Cohen, chief investment strategist at Goldman Sachs & Co. and a noted stock-market optimist. This weekend, she said U.S. stocks in general are "modestly undervalued." She recommended "main-line" technology stocks, citing their enormous earnings growth, high returns on equity, and high profit margins, which she said suggest many are likely to perform well.
Many Internets continued their recent upsurge on the anticipation of a strong holiday season, with Amazon gaining 1.31 to 66.31, America Online adding 3.5 to 101, and eToys rising 1.19 to 60.56.
Yahoo and Priceline, however, slumped, dropping 2.5 to 180.81 and 4.63 to 60.94, respectively.
Bloomberg contributed to this report.
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