Stocks staged a late-session rally Monday as investors, putting aside a new wave of anthrax scares, bet on a 2002 recovery amid upbeat earnings from the likes of blue-chip Minnesota Mining & Manufacturing Co. 

"Expectations are so low that anything mildly positive can give the markets a shot," said Richard Sichel, chief investment officer of Philadelphia Trust Co., which oversees $550 million. "People are willing to say: 'We've seen the worst of the news, and the worst of stock prices, and let's do some bargain hunting."'

Stock prices already reflect bad earnings after major market indexes have lost between 13 percent and 31 percent of their value this year, and investors are taking heart that many companies are meeting or beating analysts' earnings estimates — albeit sharply reduced ones.

The Dow leaped 172.92 points, or 1.88 percent, to end at 9,377.03, according to the latest data, while a rally in semiconductor and related issues pumped up the Nasdaq composite 36.78 points, or 2.2 percent, to 1,708.08.

The Standard & Poor's 500 rose 16.42 points, or 1.53 percent, to 1,089.90.

Stocks cut gains in about half in early afternoon on news that two postal workers, who handled mail for Capitol Hill, have died and are being tested for anthrax inhalation. Anthrax cases have multiplied after the United States began bombing targets in Afghanistan on Oct. 7 in retaliation for the deadly Sept. 11 attacks.

But the market regained lost ground as Wall Street bet lower interest rates and government stimulus packages will soon kick in.

"We know there's bioterrorism, we know there's a war going on — you can't dwell on that day by day, minute by minute, and we think that, given the stimulus that is in the pipeline, there's a recovery coming," said Larry Wachtel, a market analyst at Prudential Securities.

Trading was active. About 1.1 billion shares changed hands on the New York Stock Exchange, while 1.5 billion traded on Nasdaq. About three stocks rose for every two that fell on the Big Board, while 10 gained for every seven that fell on the Nasdaq.

Helping the Dow was better-than-expected profit news from Minnesota Mining & Manufacturing, also known as 3M, which makes Scotch tape and Post-It notes. A rally in beaten-down computer chip equipment stocks like Applied Materials boosted technology-stock indexes.

3M shot up $5.22 to $107.39 after reporting earnings fell 21 percent, but still squeaked by forecasts. The stock has lost almost 11 percent this year.

"My customers are looking to buy because they see good values and they're thinking the worst is behind us," said Holly Liss, a strategist for Fuji Futures.

Wall Street is looking to interest-rate cuts and government-sponsored stimulus packages to jump-start the lagging economy. The Federal Reserve has cut rates nine times this year — twice since the Sept. 11 attacks — and an economic stimulus package worth about $100 billion is making its way through Congress.

Enron Corp. was the most active stock on the NYSE, slumping $5.40 to $20.65, after North America's biggest buyer and seller of natural gas and electricity said the Securities and Exchange Commission is looking into company transactions.

Steel stocks jumped after a U.S. trade panel cleared the way for President Bush to impose restrictions on imports of some steel products. Nucor Corp. rose $2.71 to $41.82.

Financial stocks climbed after financial services giant American Express Co. reported earnings that were within the range of analysts' forecasts. American Express rose $1 to $30.32, while J.P. Morgan Chase & Co. gained $1.44 to $35.31.

But SBC Communications capped the Dow's gain after the No. 2 U.S. local telephone company posted a 31 percent drop in earnings and said it will cut thousands of jobs and slash capital spending by 20 percent, due to the weak economy and stiff competition. SBC fell $2.24 to $41.40.

Wall Street was unfazed by the latest economic data after a key forecasting gauge for the U.S. economy indicated the economy would likely remain weak into next year. The Conference Board's U.S. index of leading economic indicators fell 0.5 percent in September, the biggest drop since January 1996.

It will be a busy week for third-quarter profit reports. Results from about 160 companies in the S&P 500 are expected this week, according to the earnings tracking firm Thomson Financial/First Call. Third-quarter corporate profits are expected to show the worst quarterly results in a decade with analysts calling on average for a 22.4 percent drop as of Friday, it said.

The Russell 2000 index, which measures performance of smaller companies, rose 4.80 to 430.50. 

Overseas markets were also higher Monday. Japan's Nikkei stock average finished up nearly 0.3 percent. Britain's FT-SE 100 rose 1.1 percent, France's CAC-40 climbed 1.8 percent and Germany's DAX index gained 2.3 percent.

Reuters and the Associated Press contributed to this report.