Technology share prices set a record high on Monday on the Nasdaq index, closing up 37.72 points or 1.988% at 2,040.88.

The Nasdaq is now up 29% for the year, an increase twice as high as the Dow Jones Industrial index of leading shares.

"We're looking at a rather bullish end of year. The economy is still growing, the Fed seems to be on top of things and the inflation is in control. That's a pretty good scenario," said BT Brokerage dealer Ken Ducey.

Among the winners were computer giants IBM, Compaq and Microsoft.

The Dow closed up 54.33 points at 9,070.47, after some 660m shares in volume were traded on the exchange.

Stocks recovered from a lacklustre morning session to finish sharply higher in a rally led by high-technology stocks after computer manufacturer Compaq's chief financial officer reportedly made optimistic comments about next year's industry prospects.

The comments pushed Compaq's shares up, closing up 3.1 at 41 and topping the most-actives list in a turnover of 30m shares.

IBM was up 2.7 at 167.3, HP up 1 at 64.5 and Dell up 1.5 at 67.5.Traders also noted the prospects for a strong ending to the year.

Microsoft was also among the big winners of the technology stocks, closing up 6.1 at 133.5 in a turnover of 22.3m after South Carolina withdrew its case from the ongoing antitrust action.

The stand down marked a certain victory for Microsoft chairman Bill Gates.

Mr Gates said AOL's acquisition of Netscape and alliance with Sun Microsystems undermined the US government's antitrust suit against the software company.

Despite today's gains, the stock market remained cautious amid continuing concerns over corporate profits and the economic outlook for Brazil, dealers said.

Talk that the House Judiciary Committee will open proceedings to impeach President Bill Clinton also has some participants worried, they added.

Continuing merger activity added to buying interest after Scottish Power announced a merger with Pacificorp for $7.9bn.

The deal will give current Scottish Power shareholders 64% of the new entity, which will retain its London listing and Glasgow headquarters.

Boeing was up 1.15 at 34.7 after the Wall Street Journal reported orders for the company's B-717s.