Stocks surged on Monday, rebounding from one of Wall Street's worst weeks ever and driving the Dow Jones industrial average up more than 360 points as investors scooped up bargains.

But the market remained extremely nervous, and no one was betting that the day's gains would hold over any length of time.

The Dow closed up 367.84, or 4.5 percent, at 8,603.65 after dropping 1,369.70 last week, its biggest-ever weekly point decline. The Dow was up as much as 413.51 in the last hour Monday.

The technology-heavy Nasdaq Composite Index rose 75.92, or 5.3 percent, to 1,499.11, while the broader Standard & Poor's 500 index advanced 37.60, or 4 percent, at 1,003.40 — back above the psychologically important 1,000-point level.

"This is the first solid buying you have seen since the attack," said Rick Meckler, president of investment firm Liberty View. "People who bought what they considered quality blue-chip stocks that are now down 30 percent from what they paid are picking this point to average in at a lower price."

Monday's gainers were spread across nearly all market sectors, an indication that cheaper prices lured buyers to the market rather than lessening fears about how long the economy will suffer. Even airline stocks were higher.

Wall Street pros welcomed the rally but recommended caution.

"The downtrend isn't over yet. We are rallying in a wider range, because of the collapse," said Bob Stovall, market strategist at Prudential Securities.

With much uncertainty still in the market after the Sept. 11 terrorist attacks, it was likely that technical factors were influencing the market in the early going. Some analysts have described the market as oversold, having fallen precipitously in a very emotional climate.

"After days of extreme market pressure, it's inevitable that the market would bounce, but whether it's sustainable for more than a day or two I don't know," said Andrew Abrams, a fund manager with CWH Associates Inc. "Visibility is getting very cloudy again, and when visibility is cloudy, markets tend to sell off."

The Russell 2000 index, the barometer of smaller company stocks, rose 13.43 to 392.32.

Winners outpaced losers 3-to-1 on the New York Stock Exchange and more than two stocks rose for every one that fell on Nasdaq. Trading was heavy, with more than 1.7 billion shares traded on the NYSE and 2 billion on Nasdaq.

Oil stocks tumbled with oil prices on worries a global recession will curb oil demand. In addition, investors said there is growing confidence the U.S.-led war on terrorism will not crimp Middle Eastern oil exports to the West. That, too, could keep prices low, they said.

The Organization of Petroleum Exporting Countries appeared powerless to respond to the collapse of oil markets that could signal the end of a price boom engineered by the cartel over the past two years.

A tottering U.S. economy makes it unlikely that OPEC, which is meeting in Vienna on Wednesday, will consider more supply cuts to put the heat back under oil prices.

Crude oil on the New York market has lost $7.73 or 26 percent of its value since Sept. 14.

Among the losers, Apache Corp. sank $2.96 to $39.35 and Schlumberger dropped $2.28 to $44.68.

Bullish comments by top strategists helped underpin market gains. Goldman's Cohen raised her stock allocation to 75 percent from 70 percent and cut her bond weighting to 22 percent from 27 percent, citing lower prices and the benefits of an easier money policy.

Banc of America Securities' Tom McManus also told clients to raise their stock allocation, saying stock prices are attractive at these levels.

In company news, optical components maker JDS Uniphase Corp. rallied $1.03 to $6.39. The optical components maker said although an industry downturn has yet to reverse, signs of stabilization are emerging.

Internet security firm VeriSign Inc. added $1.56 to $39.86. VeriSign said it plans to buy Illuminet Holdings Inc., a provider of network connectivity and services to telecommunications carriers, in an all stock deal valued at $1.2 billion. Illuminet rose $1.39 to $36.37.

Even gloomy news from Federated Department Stores Inc. did not seem to dent enthusiasm.

The parent of Macy's and Bloomingdale's stores said sales are running 20 percent below its forecast since the attacks and warned it will lower its earnings guidance for the rest of fiscal 2001. But Federated rose $1.32 to $28.22.

Wall Street also drew some support from overseas markets on Monday. London's FT-SE 100 index finished up 4.1 percent, while France's CAC-40 closed with a gain of 5.7 percent. In afternoon trading, Frankfurt's DAX index rose 6.9 percent. Japanese markets were closed for a holiday.

Goldman Sach's chief investment strategist Abby Joseph Cohen raised her recommended stocks allocation to 75 percent from 70 percent and cut her bond weighting to 22 percent from 27 percent. Stocks are more attractive than before in part because they are undervalued, Cohen told clients.

Standard & Poor's said the U.S. economy will slip into a moderate recession in 2001, but its outlook for 2002 remains the same, as government spending kicks in to help repair shattered buildings and confidence.

"There will be a downswipe and then a substantial bounce back," David Blitzer, chief investment strategist for S&P said. "Congress is going to get down to business and spend a lot of money and that's what you need."

The Federal Reserve has chopped interest rates eight times this year to jump-start the economy, and Wall Street expects a ninth cut later in the year.

The Associated Press and Reuters contributed to this report.