A disappointing US Treasury auction undercut a powerful rally in blue-chip stocks yesterday, leaving them only modestly higher. But the broader market advanced unscathed on the strength of Internet stocks.

The Dow Jones industrial average was up 18.90 points - or 0.2 per cent - at 11,026.15, just shy of its record high close of 11,031.59 last Friday.

The Standard and Poor's 500 rose 15.31 to 1,355.61, and the Nasdaq composite index rose 40.27 to 2,566.66.

Advancing issues outnumbered decliners by a four-to-three margin on the New York Stock Exchange, with 1,717 up, 1,320 down and 539 unchanged. The NYSE composite index rose 6.42 to 645.76, and the American Stock Exchange composite index rose 2.21 to 789.29.