The US rally sparked recoveries in Brazil, where stocks spiked nearly 7 per cent higher, and in Argentina, whose main index registered a jump of 8.8 per cent. Canada finished with only slender gains and stocks fell in Venezuela.Taken by itself, the US stocks rally was an impressive showing. A day after suffering its second-largest point loss ever, the Dow Jones industrial average responded with a surge of 288.36 points, or 3.8 per cent, to 7,827.43, its second-largest point gain.

The technology-heavy Nasdaq composite index also bounced back, posting a record 75.84 point gain to end up 5.1 per cent. The Dow's show of strength was eclipsed in point terms only by a 337.17-point burst on October 28, 1997, also aTuesday session and one that directly followed the Dow's standing record 554.26 point tumble.

The gain in stocks was accompanied by a retreat in US Treasuries. The benchmark 30-year bond, which has served as the equivalent of a bomb shelter in recent sessions, fell more than a full point, driving the yield back up to 5.35 per cent. Early in the session, a chorus of Wall Street voices counseled buying on the lows created by the six-week slide in US stocks, advice investors finally appeared to heed.

Strategists at Goldman Sachs & Co Inc, JP Morgan Securities and Legg Mason Wood Walker all recommended clients increase their exposure to stocks and take advantage of the markdown in share prices. Goldman and JP Morgan both offered the same advice following the October 27, 1997 sell-off.

PaineWebber chief investment strategist Ed Kerschner also argued the bullish case, pointing to continued economic growth in the United States and Europe as the critical factor. "Absent a US and European recession, this marketis cheap," Kerschner said. "The stock market is approaching excessively undervalued levels, almost the mirror image of the overvalued levels reached in the early autumn of 1987."

However, as Kerschner and other analysts pointed out, the mere fact that the market was undervalued was of little significance unless investors were willing to sift for bargains. They did in force, and on the New York Stock Exchange volume surpassed 1.21 billion shares, edging past the October 28 session as the busiest ever. The NYSE's systems handled the order flow smoothly, Chairman Richard Grasso said after the cose.

Not everyone viewed the lower-priced market as an irresistible bargain. At Prudential Securities, chief technical analyst Ralph Acampora said a technical rally was "due at any time" but advised using any rallies to sell into strength. Merrill Lynch, in an internal note to employees, reaffirmed its view that bonds were the best option for investors in the current environment. As on Monday, the main market story wasthe market itself.