Wall Street stocks rallied yesterday, from an early plunge triggered by news that computer chip giant Intel expects to report disappointing sales and profits.

The Dow Jones industrial average recovered from an early 88 point deficit, rising 0.86 to 7,331.04 with help from the bond market, where interest rates fell amid some new signs that economic activity may be easing enough to keep inflation in check.

Broader measures also rebounded from the early slide, which saw the Nasdaq composite index tumble nearly 50 points, or about 3.5 per cent, after a sharp sell off in Intel's shares.

Before the start of trading, Intel had warned that weak demand, especially in Europe, would hurt its results for the April June quarter.