Blue-chip stocks ended a brief slump yesterday, rallying as fund managers spruced up portfolios with popular names before the close of their fiscal year.

The Dow Jones industrial average rose 123.06 points - or by nearly 1.5 per cent - to 8,495.03, the biggest gain in nearly two weeks. The strength among the blue chips drove other popular indices to big gains too, but the buying was more restrained among smaller company names.

In a report that easily might have shaken expectations for more cuts in interest rates by the Federal Reserve, the government said employment costs rose more than expected in the third quarter. Wages, salaries and benefits paid to workers rose 1 per cent in the July-September quarter despite the dent to American exports inflicted by economic crises abroad.

Advancing issues outnumbered decliners by an eight-to-five margin on the New York Stock Exchange, with 1,880 up, 1,178 down and 455 unchanged. NYSE volume totalled 695.00 million shares.