NEW YORK (CNNfn) - The Nasdaq composite index surged to its highest close in more than two months Monday, coming within 80 points of wiping out all its losses for the year, lifted by a Intel, which rose on positive comments from a Wall Street brokerage
Lehman Brothers raised its earnings forecasts for Intel, sending shares of the world's largest chipmaker and Dow Jones industrial average member up more than 8 percent.
"Intel's the story of the day," said Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin.
Other technology stocks also surged, including Oracle and JDS Uniphase.
"We're looking for any excuse to rally," said Finnerty, who linked the gains to the growing belief that the Federal Reserve won't raise the cost of borrowing when it meets next week.
 Financial stocks also rose following Friday's sell-off, bolstering the Dow. But Dow component Honeywell kept those gains in check. The company warned that second-quarter earnings will miss Wall Street expectations.
The Nasdaq rose 129.29, or 3.3 percent, to 3,889.85, the highest close since the week of April 9. The index is only 80 points away from the 4,069 mark it ended at on Dec. 31, 1999. Still, the Nasdaq is down 21 percent from its March 10 high of 5,048.
The Dow, meanwhile, rose 108.54 points, or 1 percent, to 10,557.84, erasing nearly half of its 265.52 point tumble Friday.
Explaining Monday's turnaround, Art Hogan, chief market analyst at Jefferies & Co., said the previous sell-off was overdone, prompting a flood of bargain hunters.
"The market got whacked for no good reason on Friday," Hogan said.
The S&P 500 jumped 21.54 to 1,486.00.
More stocks rose than fell. Advancing issues on the New York Stock Exchange edged out declining ones 1,501 to 1,336 as more than 919 million shares changed hands. Winners topped losers on the Nasdaq 2,046 to 1,894 on volume of more than 1.3 billion shares.
In other markets, the dollar fell against the yen but gained verses the euro. Treasury securities edged lower.
Buyers pour into Intel
Intel (INTC: Research, Estimates) surged 10-7/16, or 8.3 percent, to 136-1/2 after Lehman Brothers analyst Dan Niles raised his 2000 earnings forecast for the chipmaker to $3.10 per share from $3.07. Reiterating his "buy" rating, Niles also put a $175 price target on the stock.
Other tech names also soared, following a week when the Nasdaq ended virtually flat. Oracle (ORCL: Research, Estimates) jumped 4-1/8 to 86 and JDS Uniphase (JDSU: Research, Estimates) rose 7-1/8 to 127-5/16.
"The impetus for the market to go up today was really inspired by the rebound in tech shares," Liam Dalton, president of Axiom Capital Management, told CNN's Street Sweep.
Financial stocks also rose, following last week's sell-off, which came after two major banks, Wachovia (WB: Research, Estimates) and UnionBanCal Corp. (UB: Research, Estimates), said higher interest rates will hurt earnings.
J.P. Morgan (JPM: Research, Estimates) jumped 2-5/8 to 120-9/16, American Express (AXP: Research, Estimates) gained 2 to 53-1/2, and Citigroup (C: Research, Estimates) gained 1-7/16 to 64-1/8.
In the latest company warning about second-quarter earnings, Honeywell (HON: Research, Estimates) tumbled 8-13/16, or 18 percent, to 39-11/16. The diverse technology and manufacturing company said it will post profits between 73 cents and 77 cents per share for the second quarter. That's below the 78 cents per share analysts polled by earnings tracker First Call expected Honeywell to earn when it reports results July 18.
 With the end of the second quarter just two weeks away, the pace of profit warnings could pick up this week. At least 21 firms issued forecasts of disappointing earnings last week. More shock could come in the days ahead.
Among the day's losers, Internet stocks fell after a weekend article in Barron's titled "Still Burning" argued that Internet firms are running out of cash.
"That might be taking a little wind out of the sails," Jefferies' Hogan said of the Barron's piece.
Yahoo! (YHOO: Research, Estimates) lost 1-7/8 to 139-1/1, eBay (EBAY: Research, Estimates) fell 1-1/4 to 59-7/8 and DoubleClick (DCLK: Research, Estimates) tumbled 1-7/16 to 37-1/16.
AT&T Wireless goes shopping
AT&T Wireless (AWE: Research, Estimates) gained 15/16 to 28-9/16 after agreeing to acquire wireless operations in San Francisco, San Diego and Houston for about $3.3 billion.
H&R Block (HRB: Research, Estimates) rose 7/16 to 30. The tax preparer is scheduled to report quarterly earnings Monday. Analysts surveyed by First Call forecast the company earned $3.44 a share in the fiscal fourth quarter, ended April 30.
H&R Block aside, only a handful of companies are reporting earnings results this week, and the next five days hold only one economic indicator -- April's trade balance.
Amid this lack of major market-moving news, Wall Street will be watching the price of oil as OPEC convenes its 109th conference in Vienna Wednesday. Oil prices, which rose last week to a two-month high, fell Friday and Monday. But that shouldn't deter Washington from pressuring the cartel to boost supply
Light sweet crude for August delivery fell 38 cents to $29.50 a barrel Monday.
"It's a wait-and-see game right now," said Peter Coolidge, senior trader at Brean Murray & Co., who sees the market trading sideways until the Federal Reserve announces its decision on interest rates next week. 
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