The Dow Jones industrial chalked up its biggest point gain ever yesterday, as the market surged more than 257 points on the back of a positive economic report. The index ended up 257.36 points, or 3.36 per cent, at 7,879.78, beating out the 186.84point rise on October 21st, 1987, two days after the market crash.

Only last week, the index of 30 blue-chip stocks crumbled 265 points on concern the market was overvalued after climbing to a record close of 8,259.31 on August 6th.

But the buying spree caught fire after the National Association of Purchasing Management reported slower-than-expected manufacturing activity in August. The data spurred the bond market and eased concern that the Federal Reserve may raise interest rates to slow the economy's growth.

In the broader market, advancing issues swamped declines 3-1 on volume of 494 million shares on the New York Stock Exchange.