Stocks rallied with technology shares in the lead as investors wagered that the group found a bottom, despite Intel's warning about softening fourth-quarter sales. Intel said on Thursday that fourth-quarter sales would lag forecasts, blaming a slowing worldwide economy. This followed earnings warnings earlier this month from Apple Computer and Gateway. However, Intel climbed 5.22 per cent to $34, as investors figured the worst was over.

Sentiment was also buoyed by the latest economic data, which showed signs of easing in the tight US labour market with the widely watched unemployment rate rising from a 30-year low.