Wall Street opened the fourth quarter with a sharp rally Wednesday as fund managers deployed the spare cash accumulated in the course of recent profit-taking. It helped that a key index of manufacturing-sector strength pointed to continued expansion, with the orders component surging to a 16-year high.

Investors didn't find similar comfort in the weekly jobless claims data presaging Friday's crucial monthly jobs report. Initial applications for unemployment insurance rose by 13,000 to 399,000 last week. The overall number of people collecting jobless benefits increased by 62,000 to 3.67 million. They're the lucky ones within the 8.9 million-strong national pool of workers who can't find work.

In other economic news, factory orders fell an unexpectedly steep 0.8% in August.

But dim statistics didn't halt the hunt for bargains in anticipation of strong third-quarter earnings. The Dow rose 19 points to 9488, while the Nasdaq ticked up 4 to 1836. The S&P 500 tacked on 2 to close at 1020.

Biotechs, networkers other than Cisco Systems (CSCO) and chip makers not named Intel (INTC) fared best. Internet stocks also thrived as speculators bet on even higher prices. Telecoms and software suppliers lagged.

Caterpillar (CAT) had the strongest blue chip, adding 2% after Credit Suisse First Boston predicted that a yet-to-be awarded government contract to rebuild Iraqi power plants could boost its 2004 earnings by at least 21%, or 25 cents a share.

U.S. manufacturers have had a harder time in other export markets. Industrial jobs have been the economy's weakest link, as low-cost Asian competition dampens hiring to a degree not seen in past recoveries.

But critics who see China as the root of America's economic malaise may want to check with UTStarcom (UTSI), which rode its largest market's growing demand for telecommunications to a 7% gain.

The company supplies advanced equipment that lets telephone companies in fast-growing emerging markets graft cheap wireless networks onto their legacy copper systems in order to meet pent-up demand for new lines.

UTStarcom's Taiwanese-born, Berkeley-educated, Silicon Valley-wired boss has turned the firm into the hottest telecom supplier thanks to booming Chinese sales of a system nicknamed Little Smart, which offers wireless connections without the roaming feature.

Revenues have soared from $368 million in Y2K to an expected $1.93 billion this year, based on last night's upward forecast revision. "The tremendous subscriber demand for our core PAS [Little Smart] systems and handsets in China continues to outstrip even our internal expectations," the chief financial officer was quoted as saying in the press release.

China has more than 230 million fixed telephone lines and a similar number of mobile subscribers, but that still leaves up to two thirds of the country's 1.3 billion people without a handset to call their own. UTStarcom's standard has attracted more than 30 million Chinese users.

The stock has been on a roller-coaster ride, doubling between the start of the year and late August, then giving up more than half of the windfall on doubts about the sustainability of UTStarcom's growth. The latest boost to quarterly and annual sales and profit estimates appeared to put those concerns to rest for the time being.

The outlook is bleaker for current tech pariah Sun Microsystems (SUNW), argued Merrill Lynch tech strategist Steven Milunovich in an open letter urging the struggling server maker to cut costs and thousands of jobs, upgrade management and sharpen its focus ? or vanish. "Sun has reached a point of crisis," Milunovich wrote. "On its current course, we believe Sun is likely to suffer further share and financial losses, become irrelevant to most users and eventually be acquired for its installed base." The letter follows a harsh profit warning that depressed Sun's share price by 17% over the last three days, including the loss of a nickel in today's action.

DaimlerChrysler's (DCX) Chrysler arm also has competitive issues after reporting a 15% year-over-year slide in September's sales. Big market-share gains by rivals headquartered in Asia (but manufacturing in the U.S.) have turned Chrysler into a No. 4 U.S. auto maker behind Toyota Motor (TM). Chrysler blamed its recent market-share losses on rising buyer incentives at General Motors (GM) and Ford (F). Whatever the cause, DaimlerChrysler shares backtracked 3%.

Stronger guidance didn't flatter Helen of Troy (HELE), a fast-growing maker of hair dryers and curling irons. Earnings expanded a lush 48% in the latest quarter, thanks to a becoming 43% sales increase. But the stock had a bad-hair day, losing 9% on disappointment with the revenues and the realization that the earnings surprise stemmed from an especially low tax rate tied to losses at a unit peddling paraffin baths.

In contrast, Internet-based DVD rental supplier Netflix (NFLX) reeled in a 19% capital gain after reporting a 74% year-over-year increase in its subscriber base. Netflix now collects a fixed monthly rental fee of roughly $20 from a reported 1.29 million movie fans. The notoriously volatile stock may have benefited from another short squeeze, since short-sellers had borrowed 31% of outstanding shares.

Tax-software maker Intuit (INTU) got penalized 3% after indicating that its quarterly loss could exceed the current Wall Street estimate.

Bonds weakened after Federal Reserve Governor Robert McTeer predicted overnight that economic growth currently estimated at 4% would eventually lead to a rise in hiring. "We can't keep having growth that fast without it producing job growth pretty soon," McTeer said. The yield on the 10-year Treasury note rose to 4% from 3.95% late Wednesday.