Stocks racked up big gains yesterday as investors took heart from a drop in long-term interest rates and strength in the market leader, International Business Machines Corp (IBM).

The Dow Jones industrial average closed up 79.56 points, or 1 per cent, at 7,996.83.

The Nasdaq composite index went on to its third consecutive record high, closing up 9.08 at 1,689.44.

In the broader market, advancing issues led declines 17-11 on moderate volume of 493 million shares on the New York Stock Exchange.

"The market seems to have regained the confidence it lost in August. Bonds were a support and technology generated some real leadership after a week of dragging its heels," said Mr Marshall Acuff, portfolio strategist at Smith Barney.

IBM leapt higher after the computer giant said it would use copper instead of aluminum to make semiconductors.