Stocks were sharply higher yesterday, as Wall Street bulls were encouraged by military gains in the US-led campaign in Afghanistan. The Nasdaq and S&P 500 posted their highest closes since late August, and the highest finish for the Dow since September 6th. Year-to-date, however, the Dow is down 9.6 per cent, Nasdaq off 23.4 per cent, and S&P 500 has lost 13.7 per cent.

On the military front, the Taliban's hard-line Islamic rule of Afghanistan appeared to be unravelling after the opposition Northern Alliance took control of the capital Kabul and other key areas.

Meanwhile, US officials said early information suggested the crash of the American Airlines passenger jet in New York was an accident.

Bucking the general uptrend was Watson Pharmaceuticals. The stock tumbled nearly 40 per cent, or $18.61, to $28.54 after the company posted a loss after and said it was refocusing away from the increasingly competitive generic drugs business.